1. LUZON DEV. BANK VS. ASSOCIATION OF LUZON DEV.

BANK EMPLOYEES 249 SCRA 162 (1995)

G.R. No. 120319 October 6, 1995

LUZON DEVELOPMENT BANK, petitioner,

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

ROMERO, J.:

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

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

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

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

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

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

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

Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or
voluntary.

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

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

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

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

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

1. Unfair labor practice cases;

2. Termination disputes;

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

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

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

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

xxx xxx xxx

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

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

In Volkschel Labor Union, et al. v. NLRC, et al.,8 on the settled premise that the judgments of courts and
awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the awards
of voluntary arbitrators determine the rights of parties; hence, their decisions have the same legal effect as
judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al.,9 this Court ruled that "a
voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity." Under these rulings, it
follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-
judicial agency but independent of, and apart from, the NLRC since his decisions are not appealable to the
latter.10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall
exercise:

xxx xxx xxx

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

xxx xxx xxx

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

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

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

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

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

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

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

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

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

SO ORDERED.
2. IRON AND STEEL CORPORATION VS. COURT OF APPEALS, 249 SCRA 539 (1995)

G.R. No. 102976 October 25, 1995

IRON AND STEEL AUTHORITY, petitioner,

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

FELICIANO, J.:

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

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

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

(b) to promote the consolidation, integration and rationalization of the industry in order to
increase industry capability and viability to service the domestic market and to compete in
international markets;

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

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

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

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

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

xxx xxx xxx

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

xxx xxx xxx

(Emphasis supplied)

P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August 1973.1 When
ISA's original term expired on 10 October 1978, its term was extended for another ten (10) years by
Executive Order No. 555 dated 31 August 1979.
The National Steel Corporation ("NSC") then a wholly owned subsidiary of the National Development
Corporation which is itself an entity wholly owned by the National Government, embarked on an expansion
program embracing, among other things, the construction of an integrated steel mill in Iligan City. The
construction of such a steel mill was considered a priority and major industrial project of the Government.
Pursuant to the expansion program of the NSC, Proclamation No. 2239 was issued by the President of the
Philippines on 16 November 1982 withdrawing from sale or settlement a large tract of public land (totalling
about 30.25 hectares in area) located in Iligan City, and reserving that land for the use and immediate
occupancy of NSC.

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

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

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

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

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

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

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

The property to be expropriated is not for public use or benefit [__] but for the use and
benefit [__] of NSC, a government controlled private corporation engaged in private business
and for profit, specially now that the government, according to newspaper reports, is offering
for sale to the public its [shares of stock] in the National Steel Corporation in line with the
pronounced policy of the present administration to disengage the government from its
private business ventures.5 (Brackets supplied)

Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October 1991, the Court of
Appeals affirmed the order of dismissal of the trial court. The Court of Appeals held that petitioner ISA, "a
government regulatory agency exercising sovereign functions," did not have the same rights as an ordinary
corporation and that the ISA, unlike corporations organized under the Corporation Code, was not entitled to
a period for winding up its affairs after expiration of its legally mandated term, with the result that upon
expiration of its term on 11 August 1987, ISA was "abolished and [had] no more legal authority to perform
governmental functions." The Court of Appeals went on to say that the action for expropriation could not
prosper because the basis for the proceedings, the ISA's exercise of its delegated authority to expropriate,
had become ineffective as a result of the delegate's dissolution, and could not be continued in the name of
Republic of the Philippines, represented by the Solicitor General:

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

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

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

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

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

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

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

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

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

(b) entities authorized by law to institute actions.

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

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

xxx xxx xxx

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

xxx xxx xxx

 (Emphasis supplied)

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

xxx xxx xxx

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

xxx xxx xxx

(Emphasis supplied)

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

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

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

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

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

xxx xxx xxx

(4) Agency of the Government refers to any of the various units of the Government,

including a department, bureau, office, instrumentality, or government-owned or
controlled corporation, or a local government or a distinct unit therein.

xxx xxx xxx

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

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

(Emphases supplied)

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

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

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

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

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

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

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

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

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

In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court, 14 the Court recognized that the
Republic may initiate or participate in actions involving its agents. There the Republic of the Philippines was
held to be a proper party to sue for recovery of possession of property although the "real" or registered
owner of the property was the Philippine Ports Authority, a government agency vested with a separate
juridical personality. The Court said:
 It can be said that in suing for the recovery of the rentals, the Republic of the Philippines
acted as principal of the Philippine Ports Authority, directly exercising the commission it had
earlier conferred on the latter as its agent. . . .15 (Emphasis supplied)

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

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

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

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

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

Among such special powers and duties shall be:

xxx xxx xxx

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

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

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

Sec. 12. Power of eminent domain. — The President shall determine when it is necessary or

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

In the present case, the President, exercising the power duly delegated under both the 1917 and
1987 Revised Administrative Codes in effect made a determination that it was necessary and
advantageous to exercise the power of eminent domain in behalf of the Government of the Republic
and accordingly directed the Solicitor General to proceed with the suit. 17
It is argued by private respondent MCFC that, because Congress after becoming once more the depository
of primary legislative power, had not enacted a statute extending the term of ISA, such non-enactment
must be deemed a manifestation of a legislative design to discontinue or abort the present expropriation
suit. We find this argument much too speculative; it rests too much upon simple silence on the part of
Congress and casually disregards the existence of Section 12 of the 1987 Administrative Code already
quoted above.

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

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

SO ORDERED.
3. REPUBLIC VS. COURT OF APPEALS, 200 SCRA 226 (1991)

G.R. No. 90482               August 5, 1991

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

Enrique V. Olmedo for Independent Sugar Farmers, Inc.

Reyes, Treyes & Fudolin Law Firm for respondents.

DAVIDE, JR., J.:

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

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

Respondent Court of Appeals dismissed the petition for lack of merit principally because

(a) Under the compromise agreement petitioner (RPB) accepted the designation/appointment as Trustee
whose obligation is to pay; it received benefits by way of trustee's fees; it may not question the right of
private respondents to attorney's fees;

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

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

(d) The respondent judge did not commit any error of jurisdiction in issuing the questioned orders; hence,
the remedy should be appeal.
The facts which gave rise to said petition are summarized by the Court of Appeals as follows:

On May 16,1986, Republic Planters Bank (hereafter referred to as RPB), Zosimo Maravilla,
Rosendo de la Rama, Bibiano Sabino, Roberto Mascufiana and Ernesto Kramer "for themselves
and in representation of other sugar producers" filed a Complaint with the respondent court, RTC
Branch 26, docketed as C.C. 86-35880 "For Sum of Money and/or Delivery of Personal Property
with Restraining Order and/or Preliminary Injunction" against the Philippine Sugar Commission
(PHILSUCOM) and the National Sugar Trading Corporation (NASUTRA) with the prayer:

WHEREFORE PREMISES CONSIDERED, it is respectfully prayed of this Honorable Court

that, after due hearing and trial, judgment be rendered in favor of Plaintiffs and against
Defendants ordering them to do the following:

1. To render a correct and faithful account of whatever amount of United States dollar
accounts/deposits in different banks, domestic and foreign, being held in agents and/or
representatives.

2. To render a correct and faithful inventory of all the physical sugar stocks for crop year
1984-85 presently remaining in the warehouses of the different sugar mills all over the
country.

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

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

5. To jointly and severally pay Plaintiffs-Producers all interests and penalties imposed by
Assignee-banks/creditors for accounts covered by unpaid sugar quedans for crop year 1984-
85.

6. To jointly and severally pay Plaintiffs claims for moral, compensatory and exemplary
damages in such accounts to be determined in the course of the trial.

7. To jointly and severally pay for the attorney's fees of twenty percent (20%) based on the
total amount that may be recovered.

8. To jointly and severally pay for the costs and litigation expenses incurred by the Plaintiffs.

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

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

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

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

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

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

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

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

Parenthetically, it may also be added that, as stated in paragraph 15 of the instant petition, the producers
and producer organizations who filed various petitions for relief from the judgment based on the
compromise agreement have appealed to the Court of Appeals the Order of 13 March 1989 denying their
petitions.2

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

In the resolution of 26 October 1989 We required respondents to comment on the petition and issued a
temporary restraining order directing respondent Judge to desist and refrain from further proceeding in Civil
Case No. 86-35880, entitled Republic Planters Bank, et al. vs. Philippine Sugar Commission, et al.4

On 23 November 1989 petitioners filed a manifestation informing this Court that at 9:30 a.m. on 26 October
1989, private respondents, accompanied by respondents sheriff and a squad of police Special Action
Force, swooped upon RPB's Bacolod Branch and divested a teller of money from her booth allegedly
because the branch manager had instructed the bank personnel to close the bank vault while the
enforcement of the court order was being verified - with the head office in Manila; the amount taken was
P179,955.31; these acts were allegedly done by virtue of, among others, the orders dated October 24 and
25, 1989 of respondent judge ordering the implementation of an alias Writ of Execution dated 21 March
1989 and the Writ of Execution dated 21 March 1986; and claiming that what was enforced was an expired
writ.5

In Our resolution of 5 December 1989 respondents were required to comment on this manifestation.6

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

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

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

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

As to the second assigned error, private respondents pointed out that the Ninth Division of the Court of
Appeals did not rule in C.A.-G.R. No. 11046 that Civil Case No. 86-35880 before the trial court was not a
class suit, and whether or not it was a class suit was not an issue therein.

On 15 January 1990 petitioners filed a motion for leave to file consolidated reply, which We granted in the
resolution of 18 January 1990.9

On 18 January 1990 petitioners filed a Manifestation and Motion10 "wherein they informed the Court that
despite the temporary restraining order issued on 26 October 1989, respondent Judge, to whom the Order
was addressed, continued to hear the case, particularly on the whereabouts of 177,087.14 piculs of sugar
for the crop year 1984-1985 allegedly stored in the different warehouses throughout the country".

In the resolution of 30 January 199011 We required respondent judge to show cause why no disciplinary
action should be taken against her for failure to comply with the resolution of 26 October 1989 ordering her
to refrain from further proceeding with Civil Case No. 86-35880 and to answer why she should not be cited
for contempt of court for such failure, within ten (10) days from notice.
On 8 March 1990 petitioners filed their Consolidated Reply to the Comment with Motion to Dismiss filed by
private respondents and the Comment of the Solicitor General.12

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

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

In Our resolution of 15 May 199015 We resolved to consider the comments of respondents as Answers to
the petition, give due course to the petition, require the parties to submit their respective memoranda within
thirty days from notice, and to note the compliance of respondent judge.

Petitioners filed their memorandum on 28 June 1990.16 Private respondents sent theirs by registered mail
on 22 August 1990 which this Court actually received on 8 September 1990.17 We shall now take up the
assigned errors.

I.

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

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

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

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

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

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

The SRA no doubt, is an administrative agency or body. An administrative agency is defined as "[a]
government body charged with administering and implementing particular legislation. Examples are
workers' compensation commissions ... and the like. ... The term 'agency' includes any department,
independent establishment, commission, administration, authority board or bureau ...21

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

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

The Court of Appeals also correctly ruled that the OGCC can represent neither the SRA nor the Republic of
the Philippines. We do not, however, share the view that only the Office of the Solicitor General can
represent the SRA.

The entry of appearance by the OGCC for the SRA was precipitated by the sudden turn-about of the Office
of the Solicitor General. Records show that the OSG eventually represented the PHILSUCOM, NASUTRA
and SRA in the trial court. However, on 29 January 1988 it filed a Manifestation dated January 27, 1988
informing the court that its appearance in the case "is limited to the issues relating only to the contempt
proceedings against the public respondents and is not concerned with the other issues raised by various
parties in their petitions for relief".22 By reason thereof, the Chairman/Administrator of SRA, Mr. Arsenio
Yulo, Jr., sent a letter23 dated 6 April 1988 to the Solicitor General, informing him that since the appearance
of the OSG is limited and that it has taken a different position, SRA's only alternative is to seek another
representative and that much to its regret, it is constrained to terminate OSG's services. He further
informed the Solicitor General that the case is being indorsed to the Office of the Government Corporate
Counsel for appropriate legal action pursuant to P.D. No. 478. There is, however, no showing that the OSG
withdrew its appearance for PHILSUCOM, NASUTRA or the SRA in the trial court. On the contrary, per its
Manifestation dated 8 February 1990, and filed with this Court on 12 February 1990,24 it "has retained its
appearance" "on behalf of the Republic of the Philippines to recover whatever amount may be owing to the
National Treasury by virtue of legal subrogation."

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

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

SECTION 1. The Office of the Government Corporate Counsel shall be the principal law office of all
government-owned and controlled corporations, including their subsidiaries except as may
otherwise be provided by their respective charters or authorized by the President (Emphasis
supplied).

sent a letter to the Office of the President, "in essence, requesting for authority for OGCC to represent SRA
in the case before the trial court," This was favorably acted by Executive Secretary Catalino Macaraig, Jr.27

Indeed, under Section 35, Chapter 12, Title III of Book IV of the Administrative Code of 1987 (Executive
Order No. 292) the Solicitor General is the lawyer of the government, its agencies and instrumentalities,
and its officials or agents. Said Section reads as follows:
 SECTION 35. Functions and Organization. — The Office of the Solicitor General shall represent the
Government of the Philippines, its agencies and instrumentalities and its officials and agents in any
litigation, proceeding, investigation or matter requiring the services of lawyers. When authorized by
the President or head of the office concerned, it shall also represent government-owned and
controlled corporations. The Office of the Solicitor General shall constitute the law office of the
Government and, as such, shall discharge duties requiring the services of lawyers. ... .

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

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

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

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

Consequently, the SRA need not be represented by the Office of the Solicitor General. It may appear in its
own behalf through its legal personnel or representative.

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

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

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

SECTION 10. Office of the Government Corporate Counsel. —The Office of the Government
Corporate Counsel (OGCC) shall act as the principal law office of all government-owned or
controlled corporations, their subsidiaries, other corporate offsprings and government acquired
asset corporations and shall exercise control and supervision over all legal departments or divisions
maintained separately and such powers and functions as are now or may hereafter be provided by
law. In the exercise of such control or suspension, the Government Corporate Counsel shall
promulgate rules and regulations to effectively implement the objectives of the Office. ...
Since the SRA is neither a government-owned or controlled corporation nor a subsidiary thereof, OGCC
does not have the authority to represent it. As to who may represent it, the Orbos case29 provides the
answer.

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

II.

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

x x x           x x x          x x x

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

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

On page 18 of the instant petition, petitioners allege that there is no necessity to secure Special
Powers of Attorney from the unnamed parties in a class suit, and the failure of petitioners' counsel
to do so does not constitute fraud, the named parties having contest over the class suit.' By such
statement, petitioners and their counsels admit their lack of authority from the rest of the alleged
40,000 sugar producers to file the class suit and enter into the compromise agreement.

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

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

Here is a situation, as pointed out by respondent NASUTRA and SRA, where petitioners in filing the
class suit claim to represent 40,000 sugar producers all over the country and yet when some of
these producers filed petition for relief and interventions, petitioners 'disowned' them, stating that the
other sugar producers have no personality to intervene, not having been named parties to the class
suit.

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

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

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

IV.

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

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

We find the explanation to be satisfactory. No malice attended the commission of the challenged act. We
accord to respondent judge good faith in her claimed desire to preserve and protect public funds. Moreover,
petitioners failed to show that the act in question caused any injury or damage to their rights or interest.

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

SO ORDERED.
4. MALAGA VS. PANACHOS, JR. 213 SCRA 516 (1992)

[G.R. No. 86695. September 3, 1992.]

MARIA ELENA MALAGA, doing business under the name B.E. CONSTRUCTION; JOSIELEEN
NAJARRO, doing business under the name BEST BUILT CONSTRUCTION; JOSE N. OCCEÑA,
doing business under the name THE FIRM OF JOSE N. OCCEÑA; and the ILOILO BUILDERS
CORPORATION, Petitioners, v. MANUEL R. PENACHOS, JR., ALFREDO MATANGGA, ENRICO
TICAR AND TERESITA VILLANUEVA, in their respective capacities as Chairman and Members
of the Pre-qualification Bids and Awards Committee (PBAC)-BENIGNO PANISTANTE, in his
capacity as President of Iloilo State College of Fisheries, as well as in their respective personal
capacities; and HON. LODRIGIO L. LEBAQUIN, Respondents.

Salas, Villareal & Velasco, for Petitioners.

Virgilio A. Sindico for Respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; GOVERNMENT INSTRUMENTALITY, DEFINED. — The 1987

Administrative Code defines a government instrumentality as follows: Instrumentality refers
to any agency of the National Government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually through a
charter. This term includes regulatory agencies, chartered institutions, and government-
owned or controlled corporations. (Sec. 2 (5) Introductory Provisions).

2. ID.; CHARTERED INSTITUTION; DEFINED; APPLICATION IN CASE AT BAR. — The 1987

Administrative Code describes a chartered institution thus: Chartered institution — refers to
any agency organized or operating under a special charter, and vested by law with functions
relating to specific constitutional policies or objectives. This term includes the state
universities and colleges, and the monetary authority of the state. (Sec. 2 (12) Introductory
Provisions). It is clear from the above definitions that ISCOF is a chartered institution and is
therefore covered by P.D. 1818. There are also indications in its charter that ISCOF is a
government instrumentality. First, it was created in pursuance of the integrated fisheries
development policy of the State, a priority program of the government to effect the socio-
economic life of the nation. Second, the Treasurer of the Republic of the Philippines shall also
be the ex-officio Treasurer of the state college with its accounts and expenses to be audited
by the Commission on Audit or its duly authorized representative. Third, heads of bureaus
and offices of the National Government are authorized to loan or transfer to it, upon request
of the president of the state college, such apparatus, equipment, or supplies and even the
services of such employees as can be spared without serious detriment to public service.
Lastly, an additional amount of P1.5M had been appropriated out of the funds of the National
Treasury and it was also decreed in its charter that the funds and maintenance of the state
college would henceforth be included in the General Appropriations Law. (Presidential Decree
No. 1523)

3. ID.; PROHIBITION OF ANY COURT FROM ISSUING INJUNCTION IN CASES INVOLVING

INFRASTRUCTURE PROJECTS OF GOVERNMENT (P.D. 1818); POWER OF THE COURTS TO
RESTRAIN APPLICATION. — In the case of Datiles and Co. v. Sucaldito, (186 SCRA 704) this
Court interpreted a similar prohibition contained in P.D. 605, the law after which P.D. 1818
was patterned. It was there declared that the prohibition pertained to the issuance of
injunctions or restraining orders by courts against administrative acts in controversies
involving facts or the exercise of discretion in technical cases. The Court observed that to
allow the courts to judge these matters would disturb the smooth functioning of the
administrative machinery. Justice Teodoro Padilla made it clear, however, that on issues
definitely outside of this dimension and involving questions of law, courts could not be
prevented by P.D. No. 605 from exercising their power to restrain or prohibit administrative
acts. We see no reason why the above ruling should not apply to P.D. 1818. There are at
least two irregularities committed by PBAC that justified injunction of the bidding and the
award of the project.

4. ID.; POLICIES AND GUIDELINES PRESCRIBED FOR GOVERNMENT INFRASTRUCTURE (PD

1594); RULES IMPLEMENTING THEREOF, NOT SUFFICIENTLY COMPLIED WITH IN CASE AT
BAR. — Under the Rules Implementing P.D. 1594, prescribing policies and guidelines for
government infrastructure contracts, PBAC shall provide prospective bidders with the Notice
to Pre-qualification and other relevant information regarding the proposed work. Prospective
contractors shall be required to file their ARC-Contractors Confidential Application for
Registration & Classifications & the PRE-C2 Confidential Pre-qualification Statement for the
Project (prior to the amendment of the rules, this was referred to as Pre-C1) not later than
the deadline set in the published Invitation to Bid, after which date no PRE-C2 shall be
submitted and received. Invitations to Bid shall be advertised for at least three times within a
reasonable period but in no case less than two weeks in at least two newspapers of general
circulations. (IB 13 1.2-19, Implementing Rules and Regulations of P.D. 1594 as amended)
PBAC advertised the pre-qualification deadline as December 2, 1988, without stating the hour
thereof, and announced that the opening of bids would be at 3 o’clock in the afternoon of
December 12, 1988. This scheduled was changed and a notice of such change was merely
posted at the ISCOF bulletin board. The notice advanced the cut-off time for the submission
of pre-qualification documents to 10 o’clock in the morning of December 2, 1988, and the
opening of bids to 1 o’clock in the afternoon of December 12, 1988. The new schedule caused
the pre-disqualification of the petitioners as recorded in the minutes of the PBAC meeting
held on December 6, 1988. While it may be true that there were fourteen contractors who
were pre-qualified despite the change in schedule, this fact did not cure the defect of the
irregular notice. Notably, the petitioners were disqualified because they failed to meet the
new deadline and not because of their expired licenses. (B.E. & Best Built’s licenses were
valid until June 30, 1989. [Ex. P & O respectively: both were marked on December 28,
1988]) We have held that where the law requires a previous advertisement before
government contracts can be awarded, non-compliance with the requirement will, as a
general rule, render the same void and of no effect. (Caltex Phil. v. Delgado Bros., 96 Phil.
368) The fact that an invitation for bids has been communicated to a number of possible
bidders is not necessarily sufficient to establish compliance with the requirements of the law if
it is shown that other possible bidders have not been similarly notified.

5. ID.; ID.; ID.; PURPOSE THEREOF; CASE AT BAR. — The purpose of the rules implementing
P.D. 1594 is to secure competitive bidding and to prevent favoritism, collusion and fraud in
the award of these contracts to the detriment of the public. This purpose was defeated by the
irregularities committed by PBAC. It has been held that the three principles in public bidding
are the offer to the public, an opportunity for competition and a basis for exact comparison of
bids. A regulation of the matter which excludes any of these factors destroys the distinctive
character of the system and thwarts the purpose of its adoption. (Hannan v. Board of
Education, 25 Okla. 372) In the case at bar, it was the lack of proper notice regarding the
pre-qualification requirement and the bidding that caused the elimination of petitioners B.E.
and Best Built. It was not because of their expired licenses, as private respondents now
claim. Moreover, the plans and specifications which are the contractors’ guide to an intelligent
bid, were not issued on time, thus defeating the guaranty that contractors be placed on equal
footing when they submit their bids. The purpose of competitive bidding is negated if some
contractors are informed ahead of their rivals of the plans and specifications that are to be
the subject of their bids.

6. ID.; ID.; ID.; EFFECT OF NON-COMPLIANCE THEREOF. — It has been held in a long line of
cases that a contract granted without the competitive bidding required by law is void, and the
party to whom it is awarded cannot benefit from it. It has not been shown that the
irregularities committed by PBAC were induced by or participated in by any of the
contractors. Hence, liability shall attach only to the private respondents for the prejudice
sustained by the petitioners as a result of the anomalies described above.

7. CIVIL LAW; NOMINAL DAMAGES; AWARD THEREOF, WHEN AVAILABLE. — As there is no

evidence of the actual loss suffered by the petitioners, compensatory damage may not be
awarded to them. Moral damages do not appear to be due either. Even so, the Court cannot
close its eyes to the evident bad faith that characterized the conduct of the private
respondents, including the irregularities in the announcement of the bidding and their efforts
to persuade the ISCOF president to award the project after two days from receipt of the
restraining order and before they moved to lift such order. For such questionable acts, they
are liable in nominal damages at least in accordance with Article 2221 of the Civil Code, which
states: Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant may be vindicated or, recognized, and
not for the purpose of indemnifying the plaintiff for any loss suffered by him. These damages
are to be assessed against the private respondents in the amount of P10,000.00 each, to be
paid separately for each of petitioners B.E. Construction and Best Built Construction.

DECISION

CRUZ, J.:

This controversy involves the extent and applicability of P.D. 1818, which prohibits any court
from issuing injunctions in cases involving infrastructure projects of the
government.chanrobles.com.ph : virtual law library

The facts are not disputed.

The Iloilo State College of Fisheries (henceforth ISCOF) through its Pre-qualification, Bids and
Awards Committee (henceforth PBAC) caused the publication in the November 25, 26, 28,
1988 issues of the Western Visayas Daily an Invitation to Bid for the construction of the Micro
Laboratory Building at ISCOF. The notice announced that the last day for the submission of
pre-qualification requirements (PRE C-1) ** was December 2, 1988, and that the bids would
be received and opened on December 12, 1988, 3 o’clock in the afternoon. 1

Petitioners Maria Elena Malaga and Josieleen Najarro, respectively doing business under the
name of the B.E. Construction and Best Built Construction, submitted their pre-qualification
documents at two o’clock in the afternoon of December 2, 1988. Petitioner Jose Occeña
submitted his own PRE-C1 on December 5, 1988. All three of them were not allowed to
participate in the bidding because their documents were considered late, having been
submitted after the cut-off time of ten o’clock in the morning of December 2, 1988.

On December 12, 1988, the petitioners filed a complaint with the Regional Trial Court of Iloilo
against the chairman and members of PBAC in their official and personal capacities. The
plaintiffs claimed that although they had submitted their PRE-C1 on time, the PBAC refused
without just cause to accept them. As a result, they were not included in the list of pre-
qualified bidders, could not secure the needed plans and other documents, and were unable
to participate in the scheduled bidding.

In their prayer, they sought the resetting of the December 12, 1988 bidding and the
acceptance of their PRE-C1 documents. They also asked that if the bidding had already been
conducted, the defendants be directed not to award the project pending resolution of their
complaint.

On the same date, Judge Lodrigio L. Lebaquin issued a restraining order prohibiting PBAC
from conducting the bidding and awarding the project. 2

On December 16, 1988, the defendants filed a motion to lift the restraining order on the
ground that the Court was prohibited from issued restraining orders, preliminary injunctions
and preliminary mandatory injunctions by P.D. 1818.chanroblesvirtualawlibrary

The decree reads pertinently as follows:chanrob1es virtual 1aw library

Section 1. No Court in the Philippines shall have jurisdiction to issue any restraining order,
preliminary injunction, or preliminary infrastructure project, or a mining, fishery, forest or
other natural resource development project of the government, or any public utility operated
by the government, including among others public utilities for the transport of the goods and
commodities, stevedoring and arrastre contracts, to prohibit any person or persons, entity or
government official from proceeding with, or continuing the execution or implementation of
any such project, or the operation of such public utility, or pursuing any lawful activity
necessary for such execution, implementation or operation.

The movants also contended that the question of the propriety of a preliminary injunction had
become moot and academic because the restraining order was received late, at 2 o’clock in
the afternoon of December 12, 1988, after the bidding had been conducted and closed at
eleven thirty in the morning of that date.

In their opposition of the motion, the plaintiffs argued against the applicability of P.D. 1818,
pointing out that while ISCOF was a state college, it had its own charter and separate
existence and was not part of the national government or of any local political subdivision.
Even if P.D. 1818 were applicable, the prohibition presumed a valid and legal government
project, not one tainted with anomalies like the project at bar.

They also cited Filipinas Marble Corp. v. IAC, 3 where the Court allowed the issuance of a writ
of preliminary injunction despite a similar prohibition found in P.D. 385. The Court therein
stated that:chanrob1es virtual 1aw library

The government, however, is bound by basic principles of fairness and decency under the due
process clauses of the Bill of Rights. P.D. 385 was never meant to protect officials of
government-lending institutions who take over the management of a borrower corporation,
lead that corporation to bankruptcy through mismanagement or misappropriation of its funds,
and who, after ruining it, use the mandatory provisions of the decree to avoid the
consequences of their misleads (p. 188, Emphasis supplied).

On January 2, 1989, the trial court lifted the restraining order and denied the petition for
preliminary injunction. It declared that the building sought to be construed at the ISCOF was
an infrastructure project of the government falling within the coverage of P.D. 1818. Even if it
were not, the petition for the issuance of a writ of preliminary injunction would still fail
because the sheriff’s return showed that PBAC was served a copy of the restraining order
after the bidding sought to be restrained had already been held. Furthermore, the members
of the PBAC could not be restrained from awarding the project because the authority to do so
was lodged in the President of the ISCOF, who was not a party to the case. 4

In the petition now before us, it is reiterated that P.D. 1818 does not cover the ISCOF
because of its separate and distinct corporate personality. It is also stressed again that the
prohibition under P.D. 1818 could not apply to the present controversy because the project
was vitiated with irregularities, to wit:chanrobles.com : virtual law library

1. The invitation to bid as published fixed the deadline of submission of pre-qualification

document on December 2, 1988 without indicating any time, yet after 10:00 o’clock of the
given late, the PBAC already refused to accept petitioners’ documents.
2. The time and date of bidding was published as December 12, 1988 at 3:00 p.m. yet it was
held at 10:00 o’clock in the morning.

3. Private respondents, for the purpose of inviting bidders to participate, issued a

mimeographed "Invitation to Bid" form, which by law (P.D. 1594 and Implementing Rules,
Exh. B-1) is to contain the particulars of the project subject of bidding for the purpose of.

(i) enabling bidders to make an intelligent and accurate bids;

(ii) for PBAC to have a uniform basis for evaluating the bids;

(iii) to prevent collusion between a bidder and the PBAC, by opening to all the particulars of a
project.

Additionally, the Invitation to Bid prepared by the respondents and the Itemized Bill of
Quantities therein were left blank. 5 And although the project in question was a
"Construction," the private respondents used an Invitation to Bid form for "Materials." 6

The petitioners also point out that the validity of the writ of preliminary injunction had not yet
become moot and academic because even if the bids had been opened before the restraining
order was issued, the project itself had not yet been awarded. The ISCOF president was not
an indispensable party because the signing of the award was merely a ministerial function
which he could perform only upon the recommendation of the Award Committee. At any rate,
the complaint had already been duly amended to include him as a party defendant.

In their Comment, the private respondents maintain that since the members of the board of
trustees of the ISCOF are all government officials under Section 7 of P.D. 1523 and since the
operations and maintenance of the ISCOF are provided for in the General Appropriations Law,
it is should be considered a government institution whose infrastructure project is covered by
P.D. 1818.

Regarding the schedule for pre-qualification, the private respondents insist that PBAC posted
on the ISCOF bulletin board an announcement that the deadline for the submission of pre-
qualifications documents was at 10 o’clock of December 2, 1988, and the opening of bids
would be held at 1 o’clock in the afternoon of December 12, 1988. As of ten o’clock in the
morning of December 2, 1988, B.E. construction and Best Built construction had filed only
their letters of intent. At two o’clock in the afternoon, B.E., and Best Built filed through their
common representative, Nenette Garuello, their pre-qualification documents which were
admitted but stamped "submitted late." The petitioners were informed of their disqualification
on the same date, and the disqualification became final on December 6, 1988. Having failed
to take immediate action to compel PBAC to pre-qualify them despite their notice of
disqualification, they cannot now come to this Court to question the binding proper in which
they had not participated.

In the petitioners’ Reply, they raise as an additional irregularity the violation of the rule that
where the estimate project cost is from P1M to P5M, the issuance of plans, specifications and
proposal book forms should made thirty days before the date of bidding. 7 They point out
that these forms were issued only on December 2, 1988, and not at the latest on November
12, 1988, the beginning of the 30-day period prior to the scheduled bidding.

In their Rejoinder, the private respondents aver that the documents of B.E. and Best Built
were received although filed late and were reviewed by the Award Committee, which
discovered that the contractors had expired licenses. B.E.’s temporary certificate of Renewal
of Contractor’s License was valid only until September 30, 1988, while Best Built’s license was
valid only up to June 30, 1988.chanrobles lawlibrary : rednad

The Court has considered the arguments of the parties in light of their testimonial and
documentary evidence and the applicable laws and jurisprudence. It finds for the petitioners.

The 1987 Administrative Code defines a government instrumentality as follows:chanrob1es

virtual 1aw library

Instrumentality refers to any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and enjoying operational
autonomy, usually through a charter. This term includes regulatory agencies, chartered
institutions, and government-owned or controlled corporations. (Sec. 2 (5) Introductory
Provisions).

The same Code describes a chartered institution thus:chanrob1es virtual 1aw library

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

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

There are also indications in its charter that ISCOF is a government instrumentality. First, it
was created in pursuance of the integrated fisheries development policy of the State, a
priority program of the government of effect the socio-economic life of the nation. Second,
the Treasurer of the Republic of the Philippines also be the ex-officio Treasurer of the state
college with its accounts and expenses to be audited by the Commission on Audit or its duly
authorized representative. Third, heads of bureaus and offices of the National Government
are authorized to loan or transfer to it, upon request of the president of the state college,
such apparatus, equipment, or supplies and even the services of such employees as can be
spared without serious detriment to public service. Lastly, an additional amount of P1.5M had
been appropriated out of the funds of the National Treasury and it was also decreed in its
charter that the funds and maintenance of the state college would henceforth be included in
the General Appropriations Law. 8

Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition in the
said decree.

In the case of Datiles and Co. v. Sucaldito, 9 this Court interpreted a similar prohibition
contained in P.D. 605, the law after which P.D. 1818 was patterned. It was there declared
that the prohibition pertained to the issuance of injunctions or restraining orders by courts
against administrative acts in controversies involving facts or the exercise of discretion in
technical cases. The Court observed that to allow the courts to judge these matters would
disturb the smooth functioning of the administrative machinery. Justice Teodoro Padilla made
it clear, however, that on issues definitely outside of this dimension and involving questions
of law, courts could not be prevented by P.D. No. 605 from exercising their power to restrain
or prohibit administrative acts.

We see no reason why the above ruling should not apply to P.D. 1818.

There are at least two irregularities committed by PBAC that justified injunction of the bidding
and the award of the project.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

First, PBAC set deadlines for the filing of the PRE-C1 and the opening of bids and then
changed these deadlines without prior notice to prospective participants.

Under the Rules Implementing P.D. 1594, prescribing policies and guidelines for government
infrastructure contracts, PBAC shall provide prospective bidders with the Notice of Pre-
qualification and other relevant information regarding the proposed work. Prospective
contractors shall be required to file their ARC-Contractors Confidential Application for
Registration & Classifications & the PRE-C2 Confidential Pre-qualification Statement for the
Project (prior to the amendment of the rules, this was referred to as PRE-C1) not later than
the deadline set in the published Invitation to Bid, after which date no PRE-C2 shall be
submitted and received. Invitations to Bid shall be advertised for at least three times within a
reasonable period but in no case less than two weeks in at least two newspapers of general
circulations. 10

PBAC advertised the pre-qualification deadline as December 2, 1988, without stating the hour
thereof, and announced that the opening of bids would be at 3 o’clock in the afternoon of
December 12, 1988. This schedule was changed and a notice of such change was merely
posted at the ISCOF bulletin board. The notice advanced the cut-off time for the submission
of pre-qualification documents to 10 o’clock in the morning of December 2, 1988, and the
opening of bids to 1 o’clock in the afternoon of December 12, 1988.

The new schedule caused the pre-disqualification of the petitioners as recorded in the minutes
of the PBAC meeting held on December 6, 1988. While it may be true that there were
fourteen contractors who were pre-qualified despite the change in schedule, this fact did not
cure the defect of the irregular notice. Notably, the petitioners were disqualified because they
failed to meet the new deadline and not because of their expired licenses. ***

We have held that where the law requires a previous advertisement before government
contracts can be awarded, non-compliance with the requirement will, as a general rule,
render the same void and of no effect 11 The facts that an invitation for bids has been
communicated to a number of possible bidders is not necessarily sufficient to establish
compliance with the requirements of the law if it is shown that other public bidders have not
been similarly notified. 12

Second, PBAC was required to issue to pre-qualified applicants the plans, specifications and
proposal book forms for the project to be bid thirty days before the date of bidding if the
estimate project cost was between P1M and P5M. PBAC has not denied that these forms were
issued only on December 2, 1988, or only ten days before the bidding scheduled for
December 12, 1988. At the very latest, PBAC should have issued them on November 12,
1988, or 30 days before the scheduled bidding.

It is apparent that the present controversy did not arise from the discretionary acts of the
administrative body nor does it involve merely technical matters. What is involved here is
non-compliance with the procedural rules on bidding which required strict observance. The
purpose of the rules implementing P.D. 1594 is to secure competitive bidding and to prevent
favoritism, collusion and fraud in the award of these contracts to the detriment of the public.
This purpose was defeated by the irregularities committed by PBAC.chanrobles law library :
red

It has been held that the three principles in public bidding are the offer to the public, an
opportunity for competition and a basis for exact comparison of bids. A regulation of the
matter which excludes any of these factors destroys the distinctive character of the system
and thwarts and purpose of its adoption. 13

In the case at bar, it was the lack of proper notice regarding the pre-qualification requirement
and the bidding that caused the elimination of petitioners B.E. and Best Built. It was not
because of their expired licenses, as private respondents now claim. Moreover, the plans and
specifications which are the contractors’ guide to an intelligent bid, were not issued on time,
thus defeating the guaranty that contractors be placed on equal footing when they submit
their bids. The purpose of competitive bidding is negated if some contractors are informed
ahead of their rivals of the plans and specifications that are to be the subject of their bids.
P.D. 1818 was not intended to shield from judicial scrutiny irregularities committed by
administrative agencies such as the anomalies above described. Hence, the challenged
restraining order was not improperly issued by the respondent judge and the writ of
preliminary injunction should not have been denied. We note from Annex Q of the private
respondent’s memorandum, however, that the subject project has already been "100%
completed as to the Engineering Standard." This fait accompli has made the petition for a writ
of preliminary injunction moot and academic.

We come now to the liabilities of the private respondents.

It has been held in a long line of cases that a contract granted without the competitive
bidding required by law is void, and the party to whom it is awarded cannot benefit from it.
14 It has not been shown that the irregularities committed by PBAC were induced by or
participated in by any of the contractors. Hence, liability shall attach only to the private
respondents for the prejudice sustained by the petitioners as a result of the anomalies
described above.

As there is no evidence of the actual loss suffered by the petitioners, compensatory damage
may not be awarded to them. Moral damages do not appear to be due either. Even so, the
Court cannot close its eyes to the evident bad faith that characterized the conduct of the
private respondents, including the irregularities in the announcement of the bidding and their
efforts to persuade the ISCOF president to award the project after two days from receipt of
the restraining order and before they moved to lift such order. For such questionable acts,
they are liable in nominal damages at least in accordance with Article 2221 of the Civil Code,
which states:jgc:chanrobles.com.ph

"Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant may be vindicated or, recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him.

These damages are to assessed against the private respondents in the amount of P10,000.00
each, to be paid separately for each of petitioners B.E. Construction and Best Built
Construction. The other petitioner, Occeña Builders, is not entitled to relief because it
admittedly submitted its pre-qualification documents on December 5, 1988, or three days
after the deadline.chanrobles virtual lawlibrary

WHEREFORE, judgment is hereby rendered: a) upholding the restraining order dated

December 12, 1988, as not covered by the prohibition in P.D. 1818; b) ordering the chairman
and the members of the PBAC board of trustees, namely Manuel R. Penachos, Jr., Alfredo
Matangga, Enrico Ticar, and Teresita Villanueva, to each pay separately to petitioners Maria
Elena Malaga and Josieleen Najarro nominal damages P10,000.00 each; and c) removing the
said chairman and members from the PBAC board of trustees, or whoever among them is still
incumbent therein, for their malfeasance in office. Costs against PBAC.

Let a copy of this decision be sent to the Office of the Ombudsman.

SO ORDERED.
5. EUGENIO VS. CSC 243 SCRA 196 (1995)

G.R. No. 115863 March 31, 1995

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

PUNO, J.:

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

First the facts. Petitioner is the Deputy Director of the Philippine Nuclear Research Institute. She applied for
a Career Executive Service (CES) Eligibility and a CESO rank on August 2, 1993, she was given a CES
eligibility. On September 15, 1993, she was recommended to the President for a CESO rank by the Career
Executive Service Board. 1

All was not to turn well for petitioner. On October 1, 1993, respondent Civil Service Commission2 passed
Resolution No. 93-4359, viz:

RESOLUTION NO. 93-4359

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

WHEREAS, Section 3, Article IX-B of the 1987 Philippine Constitution provides that "The
Civil Service Commission, as the central personnel agency of the government, is mandated
to establish a career service and adopt measures to promote morale, efficiency, integrity,
responsiveness, progresiveness and courtesy in the civil service, . . .";

WHEREAS, Section 12 (1), Title I, Subtitle A, Book V of the Administrative Code of 1987
grants the Commission the power, among others, to administer and enforce the
constitutional and statutory provisions on the merit system for all levels and ranks in the Civil
Service;

WHEREAS, Section 7, Title I, Subtitle A, Book V of the Administrative Code of 1987

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

WHEREAS, Section 8 (c), Title I, Subtitle A, Book V of the administrative Code of 1987
provides that "The third level shall cover Positions in the Career Executive Service";

WHEREAS, the Commission recognizes the imperative need to consolidate, integrate and
unify the administration of all levels of positions in the career service.

WHEREAS, the provisions of Section 17, Title I, Subtitle A. Book V of the Administrative
Code of 1987 confers on the Commission the power and authority to effect changes in its
organization as the need arises.

WHEREAS, Section 5, Article IX-A of the Constitution provides that the Civil Service
Commission shall enjoy fiscal autonomy and the necessary implications thereof;
 NOW THEREFORE, foregoing premises considered, the Civil Service Commission hereby
resolves to streamline reorganize and effect changes in its organizational structure. Pursuant
thereto, the Career Executive Service Board, shall now be known as the Office for Career
Executive Service of the Civil Service Commission. Accordingly, the existing personnel,
budget, properties and equipment of the Career Executive Service Board shall now form part
of the Office for Career Executive Service.

The above resolution became an impediment. to the appointment of petitioner as Civil Service Officer,
Rank IV. In a letter to petitioner, dated June 7, 1994, the Honorable Antonio T. Carpio, Chief Presidential
legal Counsel, stated:

xxx xxx xxx

On 1 October 1993 the Civil Service Commission issued CSC Resolution No. 93-4359 which
abolished the Career Executive Service Board.

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

xxx xxx xxx

You may, however, bring a case before the appropriate court to settle the legal issues
arising from issuance by the Civil Service Commission of CSC Resolution No. 93-4359, for
guidance of all concerned.

Thank You.

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

A.

IN VIOLATION OF THE CONSTITUTION, RESPONDENT COMMISSION USURPED THE

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

B.

ALSO IN VIOLATION OF THE CONSTITUTION, RESPONDENT CSC USURPED THE

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

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

ARGUMENTS FOR PUBLIC RESPONDENT-CSC

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

RESPONDENT-CSC.

II. THE RECOMMENDATION SUBMITTED TO THE PRESIDENT FOR APPOINTMENT TO

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

III. THE OFFICE OF THE PRESIDENT IS ESTOPPED FROM QUESTIONING THE

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

IV. THE INTEGRATION OF THE CESB INTO THE COMMISSION IS AUTHORIZED BY

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

We find merit in the petition.3

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

Article IV — Career Executive Service

1. A Career Executive Service is created to form a continuing pool of well-selected and

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

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

xxx xxx xxx

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

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

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

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

Sec. 17. Organizational Structure. — Each office of the Commission shall be headed by a

Director with at least one Assistant Director, and may have such divisions as are necessary
independent constitutional body, the Commission may effect changes in the organization as
the need arises.

But as well pointed out by petitioner and the Solicitor General, Section 17 must be read together with
Section 16 of the said Code which enumerates the offices under the respondent Commission, viz:

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

(1) The Office of the Executive Director headed by an Executive Director, with a Deputy

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

(2) The Merit System Protection Board composed of a Chairman and two (2) members shall
have the following functions:

xxx xxx xxx

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

(4) The Office of Planning and Management shall formulate development plans, programs

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

(5) The Central Administrative Office shall provide the Commission with personnel, financial,
logistics and other basic support services.

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

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

(7) The Office of Position Classification and Compensation shall formulate and implement

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

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

assistance in developing and implementing the overall Commission programs relating to
recruitment, execution and placement, and formulate policies, standards, rules and
regulations for the proper implementation of the Commission's examination and placement
programs.
 (9) The Office of Career Systems and Standards shall provide leadership and assistance in
the formulation and evaluation of personnel systems and standards relative to performance
appraisal, merit promotion, and employee incentive benefit and awards.

(10) The Office of Human Resource Development shall provide leadership and assistance in

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

(11) The Office of Personnel Inspection and Audit shall develop policies, standards, rules
and regulations for the effective conduct or inspection and audit personnel and personnel
management programs and the exercise of delegated authority; provide technical and
advisory services to Civil Service Regional Offices and government agencies in the
implementation of their personnel programs and evaluation systems.

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

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

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

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

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

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

As read together, the inescapable conclusion is that respondent Commission's power to reorganize
is limited to offices under its control as enumerated in Section 16, supra. From its inception, the
CESB was intended to be an autonomous entity, albeit administratively attached to respondent
Commission. As conceptualized by the Reorganization Committee "the CESB shall be autonomous.
It is expected to view the problem of building up executive manpower in the government with a
broad and positive outlook." 6 The essential autonomous character of the CESB is not negated by
its attachment to respondent Commission. By said attachment, CESB was not made to fall within
the control of respondent Commission. Under the Administrative Code of 1987, the purpose of
attaching one functionally inter-related government agency to another is to attain "policy and
program coordination." This is clearly etched out in Section 38(3), Chapter 7, Book IV of the
aforecited Code, to wit:

(3) Attachment. — (a) This refers to the lateral relationship between the department or its
equivalent and attached agency or corporation for purposes of policy and program
coordination. The coordination may be accomplished by having the department represented
in the governing board of the attached agency or corporation, either as chairman or as a
member, with or without voting rights, if this is permitted by the charter; having the attached
corporation or agency comply with a system of periodic reporting which shall reflect the
progress of programs and projects; and having the department or its equivalent provide
general policies through its representative in the board, which shall serve as the framework
for the internal policies of the attached corporation or agency.
Respondent Commission also relies on the case of Datumanong, et al., vs. Civil Service Commission, G.
R. No. 114380 where the petition assailing the abolition of the CESB was dismissed for lack of cause of
action. Suffice to state that the reliance is misplaced considering that the cited case was dismissed for lack
of standing of the petitioner, hence, the lack of cause of action.

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

SO ORDERED.
6. DE LA LLANA VS. ALBA, 112 SCRA 294 (1982)

G.R. No. L-57883 March 12, 1982

GUALBERTO J. DE LA LLANA Presiding Judge, Branch II of the City Court of Olongapo,

ESTANISLAO L. CESA, JR., FIDELA Y. VARGAS, BENJAMIN C. ESCOLANGO, JUANITO C.
ATIENZA, MANUEL REYES ROSAPAPAN, JR., VIRGILIO E. ACIERTO, and PORFIRIO AGUILLON
AGUILA, petitioners,
vs.
MANUEL ALBA, Minister of Budget, FRANCISCO TANTUICO, Chairman, Commission on Audit, and
RICARDO PUNO, Minister of Justice, Respondents.

FERNANDO, C.J.:

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

That is the fundamental issue raised in this proceeding, erroneously entitled Petition for Declaratory Relief
and/or for Prohibition 4 considered by this Court as an action for prohibited petition, seeking to enjoin
respondent Minister of the Budget, respondent Chairman of the Commission on Audit, and respondent
Minister of Justice from taking any action implementing Batas Pambansa Blg. 129. Petitioners 5 sought to
bolster their claim by imputing lack of good faith in its enactment and characterizing as an undue delegation
of legislative power to the President his authority to fix the compensation and allowances of the Justices
and judges thereafter appointed and the determination of the date when the reorganization shall be
deemed completed. In the very comprehensive and scholarly Answer of Solicitor General Estelito P.
Mendoza, 6 it was pointed out that there is no valid justification for the attack on the constitutionality of this
statute, it being a legitimate exercise of the power vested in the Batasang Pambansa to reorganize the
judiciary, the allegations of absence of good faith as well as the attack on the independence of the judiciary
being unwarranted and devoid of any support in law. A Supplemental Answer was likewise filed on October
8, 1981, followed by a Reply of petitioners on October 13. After the hearing in the morning and afternoon of
October 15, in which not only petitioners and respondents were heard through counsel but also the amici
curiae, 7 and thereafter submission of the minutes of the proceeding on the debate on Batas Pambansa Blg.
129, this petition was deemed submitted for decision.

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

1. The argument as to the lack of standing of petitioners is easily resolved. As far as Judge de la Llana is
concerned, he certainly falls within the principle set forth in Justice Laurel's opinion in People v.
Vera. 8 Thus: "The unchallenged rule is that the person who impugns the validity of a statute must have a
personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a
result of its enforcement." 9 The other petitioners as members of the bar and officers of the court cannot be
considered as devoid of "any personal and substantial interest" on the matter. There is relevance to this
excerpt from a separate opinion in Aquino, Jr. v. Commission on Elections:  10 "Then there is the attack on
the standing of petitioners, as vindicating at most what they consider a public right and not protecting their
rights as individuals. This is to conjure the specter of the public right dogma as an inhibition to parties intent
on keeping public officials staying on the path of constitutionalism. As was so well put by Jaffe: 'The
protection of private rights is an essential constituent of public interest and, conversely, without a well-
ordered state there could be no enforcement of private rights. Private and public interests are, both in
substantive and procedural sense, aspects of the totality of the legal order.' Moreover, petitioners have
convincingly shown that in their capacity as taxpayers, their standing to sue has been amply demonstrated.
There would be a retreat from the liberal approach followed in Pascual v. Secretary of Public
Works, foreshadowed by the very decision of People v. Vera where the doctrine was first fully discussed, if
we act differently now. I do not think we are prepared to take that step. Respondents, however, would hark
back to the American Supreme Court doctrine in Mellon v. Frothingham with their claim that what
petitioners possess 'is an interest which is shared in common by other people and is comparatively so
minute and indeterminate as to afford any basis and assurance that the judicial process can act on it.' That
is to speak in the language of a bygone era even in the United States. For as Chief Justice Warren clearly
pointed out in the later case of Flast v. Cohen, the barrier thus set up if not breached has definitely been
lowered." 11

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

3. There is no denying, therefore, the need for "institutional reforms," characterized in the Report as "both
pressing and urgent." 21 It is worth noting, likewise, as therein pointed out, that a major reorganization of
such scope, if it were to take place, would be the most thorough after four generations. 22 The reference
was to the basic Judiciary Act generations . enacted in June of 1901, 23 amended in a significant way, only
twice previous to the Commonwealth. There was, of course, the creation of the Court of Appeals in 1935,
originally composed "of a Presiding Judge and ten appellate Judges, who shall be appointed by the
President of the Philippines, with the consent of the Commission on Appointments of the National
Assembly, 24 It could "sit en banc, but it may sit in two divisions, one of six and another of five Judges, to
transact business, and the two divisions may sit at the same time." 25 Two years after the establishment of
independence of the Republic of the Philippines, the Judiciary Act of 1948 26 was passed. It continued the
existing system of regular inferior courts, namely, the Court of Appeals, Courts of First Instance, 27 the
Municipal Courts, at present the City Courts, and the Justice of the Peace Courts, now the Municipal Circuit
Courts and Municipal Courts. The membership of the Court of Appeals has been continuously
increased. 28 Under a 1978 Presidential Decree, there would be forty-five members, a Presiding Justice and
forty-four Associate Justices, with fifteen divisions. 29 Special courts were likewise created. The first was the
Court of Tax Appeals in 1954, 30 next came the Court of Agrarian Relations in 1955, 31 and then in the same
year a Court of the Juvenile and Domestic Relations for Manila in 1955, 32 subsequently followed by the
creation of two other such courts for Iloilo and Quezon City in 1966. 33 In 1967, Circuit Criminal Courts were
established, with the Judges having the same qualifications, rank, compensation, and privileges as judges
of Courts of First Instance. 34

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

5. Nothing is better settled in our law than that the abolition of an office within the competence of a
legitimate body if done in good faith suffers from no infirmity. The ponencia of Justice J.B.L. Reyes in Cruz
v. Primicias, Jr. 38 reiterated such a doctrine: "We find this point urged by respondents, to be without merit.
No removal or separation of petitioners from the service is here involved, but the validity of the abolition of
their offices. This is a legal issue that is for the Courts to decide. It is well-known rule also that valid
abolition of offices is neither removal nor separation of the incumbents. ... And, of course, if the abolition is
void, the incumbent is deemed never to have ceased to hold office. The preliminary question laid at rest,
we pass to the merits of the case. As well-settled as the rule that the abolition of an office does not amount
to an illegal removal of its incumbent is the principle that, in order to be valid, the abolition must be made in
good faith." 39 The above excerpt was quoted with approval in Bendanillo, Sr. v. Provincial Governor,  40 two
earlier cases enunciating a similar doctrine having preceded it. 41 As with the offices in the other branches
of the government, so it is with the judiciary. The test remains whether the abolition is in good faith. As that
element is conspicuously present in the enactment of Batas Pambansa Blg. 129, then the lack of merit of
this petition becomes even more apparent. The concurring opinion of Justice Laurel in Zandueta v. De la
Costa  42 cannot be any clearer. This is a quo warranto proceeding filed by petitioner, claiming that he, and
not respondent, was entitled to he office of judge of the Fifth Branch of the Court of First Instance of Manila.
There was a Judicial Reorganization Act in 1936, 43 a year after the inauguration of the Commonwealth,
amending the Administrative Code to organize courts of original jurisdiction known as the Courts of First
Instance Prior to such statute, petitioner was the incumbent of such branch. Thereafter, he received an ad
interim appointment, this time to the Fourth Judicial District, under the new legislation. Unfortunately for
him, the Commission on Appointments of then National Assembly disapproved the same, with respondent
being appointed in his place. He contested the validity of the Act insofar as it resulted in his being forced to
vacate his position This Court did not rule squarely on the matter. His petition was dismissed on the ground
of estoppel. Nonetheless, the separate concurrence of Justice Laurel in the result reached, to repeat,
reaffirms in no uncertain terms the standard of good faith to preclude any doubt as to the abolition of an
inferior court, with due recognition of the security of tenure guarantee. Thus: " I am of the opinion that
Commonwealth Act No. 145 in so far as it reorganizes, among other judicial districts, the Ninth Judicial
District, and establishes an entirely new district comprising Manila and the provinces of Rizal and Palawan,
is valid and constitutional. This conclusion flows from the fundamental proposition that the legislature may
abolish courts inferior to the Supreme Court and therefore may reorganize them territorially or otherwise
thereby necessitating new appointments and commissions. Section 2, Article VIII of the Constitution vests
in the National Assembly the power to define, prescribe and apportion the jurisdiction of the various courts,
subject to certain limitations in the case of the Supreme Court. It is admitted that section 9 of the same
article of the Constitution provides for the security of tenure of all the judges. The principles embodied in
these two sections of the same article of the Constitution must be coordinated and harmonized. A mere
enunciation of a principle will not decide actual cases and controversies of every sort. (Justice Holmes in
Lochner vs. New York, 198 U.S., 45; 49 Law. ed; 937)" 44 justice Laurel continued: "I am not insensible to
the argument that the National Assembly may abuse its power and move deliberately to defeat the
constitutional provision guaranteeing security of tenure to all judges, But, is this the case? One need not
share the view of Story, Miller and Tucker on the one hand, or the opinion of Cooley, Watson and Baldwin
on the other, to realize that the application of a legal or constitutional principle is necessarily factual and
circumstantial and that fixity of principle is the rigidity of the dead and the unprogressive. I do say, and
emphatically, however, that cases may arise where the violation of the constitutional provision regarding
security of tenure is palpable and plain, and that legislative power of reorganization may be sought to cloak
an unconstitutional and evil purpose. When a case of that kind arises, it will be the time to make the
hammer fall and heavily. But not until then. I am satisfied that, as to the particular point here discussed, the
purpose was the fulfillment of what was considered a great public need by the legislative department and
that Commonwealth Act No. 145 was not enacted purposely to affect adversely the tenure of judges or of
any particular judge. Under these circumstances, I am for sustaining the power of the legislative
department under the Constitution. To be sure, there was greater necessity for reorganization consequent
upon the establishment of the new government than at the time Acts Nos. 2347 and 4007 were approved
by the defunct Philippine Legislature, and although in the case of these two Acts there was an express
provision providing for the vacation by the judges of their offices whereas in the case of Commonwealth Act
No. 145 doubt is engendered by its silence, this doubt should be resolved in favor of the valid exercise of
the legislative power." 45

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

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

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

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

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

11. On the morning of the hearing of this petition on September 8, 1981, petitioners sought to have the
writer of this opinion and Justices Ramon C. Aquino and Ameurfina Melencio-Herrera disqualified because
the first-named was the chairman and the other two, members of the Committee on Judicial
Reorganization. At the hearing, the motion was denied. It was made clear then and there that not one of the
three members of the Court had any hand in the framing or in the discussion of Batas Pambansa Blg. 129.
They were not consulted. They did not testify. The challenged legislation is entirely the product of the
efforts of the legislative body. 100 Their work was limited, as set forth in the Executive Order, to submitting
alternative plan for reorganization. That is more in the nature of scholarly studies. That the undertook.
There could be no possible objection to such activity. Ever since 1973, this Tribunal has had administrative
supervision over interior courts. It has had the opportunity to inform itself as to the way judicial business is
conducted and how it may be improved. Even prior to the 1973 Constitution, it is the recollection of the
writer of this opinion that either the then Chairman or members of the Committee on Justice of the then
Senate of the Philippines 101 consulted members of the Court in drafting proposed legislation affecting the
judiciary. It is not inappropriate to cite this excerpt from an article in the 1975 Supreme Court Review: "In
the twentieth century the Chief Justice of the United States has played a leading part in judicial reform. A
variety of conditions have been responsible for the development of this role, and foremost among them has
been the creation of explicit institutional structures designed to facilitate reform." 102 Also: "Thus the Chief
Justice cannot avoid exposure to and direct involvement in judicial reform at the federal level and, to the
extent issues of judicial federalism arise, at the state level as well." 103

12. It is a cardinal article of faith of our constitutional regime that it is the people who are endowed with
rights, to secure which a government is instituted. Acting as it does through public officials, it has to grant
them either expressly or impliedly certain powers. Those they exercise not for their own benefit but for the
body politic. The Constitution does not speak in the language of ambiguity: "A public office is a public
trust." 104 That is more than a moral adjuration It is a legal imperative. The law may vest in a public official
certain rights. It does so to enable them to perform his functions and fulfill his responsibilities more
efficiently. It is from that standpoint that the security of tenure provision to assure judicial independence is
to be viewed. It is an added guarantee that justices and judges can administer justice undeterred by any
fear of reprisal or untoward consequence. Their judgments then are even more likely to be inspired solely
by their knowledge of the law and the dictates of their conscience, free from the corrupting influence of
base or unworthy motives. The independence of which they are assured is impressed with a significance
transcending that of a purely personal right. As thus viewed, it is not solely for their welfare. The challenged
legislation Thus subject d to the most rigorous scrutiny by this Tribunal, lest by lack of due care and
circumspection, it allow the erosion of that Ideal so firmly embedded in the national consciousness There is
this farther thought to consider. independence in thought and action necessarily is rooted in one's mind and
heart. As emphasized by former Chief Justice Paras in Ocampo v. Secretary of Justice,  105 there is no surer
guarantee of judicial independence than the God-given character and fitness of those appointed to the
Bench. The judges may be guaranteed a fixed tenure of office during good behavior, but if they are of such
stuff as allows them to be subservient to one administration after another, or to cater to the wishes of one
litigant after another, the independence of the judiciary will be nothing more than a myth or an empty Ideal.
Our judges, we are confident, can be of the type of Lord Coke, regardless or in spite of the power of
Congress — we do not say unlimited but as herein exercised — to reorganize inferior courts." 106 That is to
recall one of the greatest Common Law jurists, who at the cost of his office made clear that he would not
just blindly obey the King's order but "will do what becomes [him] as a judge." So it was pointed out in the
first leading case stressing the independence of the judiciary, Borromeo v. Mariano,  107 The ponencia of
Justice Malcolm Identified good judges with "men who have a mastery of the principles of law, who
discharge their duties in accordance with law, who are permitted to perform the duties of the office
undeterred by outside influence, and who are independent and self-respecting human units in a judicial
system equal and coordinate to the other two departments of government." 108 There is no reason to
assume that the failure of this suit to annul Batas Pambansa Blg. 129 would be attended with deleterious
consequences to the administration of justice. It does not follow that the abolition in good faith of the
existing inferior courts except the Sandiganbayan and the Court of Tax Appeals and the creation of new
ones will result in a judiciary unable or unwilling to discharge with independence its solemn duty or one
recreant to the trust reposed in it. Nor should there be any fear that less than good faith will attend the
exercise be of the appointing power vested in the Executive. It cannot be denied that an independent and
efficient judiciary is something to the credit of any administration. Well and truly has it been said that the
fundamental principle of separation of powers assumes, and justifiably so, that the three departments are
as one in their determination to pursue the Ideals and aspirations and to fulfilling the hopes of the sovereign
people as expressed in the Constitution. There is wisdom as well as validity to this pronouncement of
Justice Malcolm in Manila Electric Co. v. Pasay Transportation Company, 109 a decision promulgated almost
half a century ago: "Just as the Supreme Court, as the guardian of constitutional rights, should not sanction
usurpations by any other department or the government, so should it as strictly confine its own sphere of
influence to the powers expressly or by implication conferred on it by the Organic Act." 110 To that basic
postulate underlying our constitutional system, this Court remains committed.

WHEREFORE, the unconstitutionality of Batas Pambansa Blg. 129 not having been shown, this petition is
dismissed. No costs.

This case has SEPARATE OPINIONS

7. JUDGE ENAGE, JULY 16, 1987

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

LIANGA BAY LOGGING, CO., INC., Petitioner, v. 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. ADMINISTRATIVE LAW; REVISED ADMINISTRATIVE CODE; BUREAU OF 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 DEVOID OF JURISDICTION TO TAKE COGNIZANCE
PURELY ADMINISTRATIVE 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."cralaw
virtua1aw library
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."cralaw virtua1aw library

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 GRANTEE; TERMS AND STIPULATIONS 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. ID.; PROVISIONAL REMEDIES; INJUNCTION; ISSUANCE THEREOF BY COURT OF FIRST

INSTANCE LIMITED TO ACTS 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).

10. ID.; SPECIAL CIVIL ACTION; 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.:

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 N90
8. SOLID HOMES, INC. VS. TERESITA PAYAWAL, AUG. 29, 1989

G.R. No. 84811 August 29, 1989

SOLID HOMES, INC., petitioner,

vs.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.

CRUZ, J.:

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

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

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

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

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

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

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

The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering the National
Housing Authority to Issue Writs of Execution in the Enforcement of Its Decisions Under Presidential
Decree No. 957." Section 1 of the latter decree provides as follows:
 SECTION 1. In the exercise of its function to regulate the real estate trade and business and
in addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

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

C. Cases involving specific performance of contractuala statutory obligations filed by buyers

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

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

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

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

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

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

xxx xxx xxx

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

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

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

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

xxx xxx xxx

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

It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the special law.
The argument that the trial court could also assume jurisdiction because of Section 41 of PD No. 957,
earlier quoted, is also unacceptable. We do not read that provision as vesting concurrent jurisdiction on the
Regional Trial Court and the Board over the complaint mentioned in PD No. 1344 if only because grants of
power are not to be lightly inferred or merely implied. The only purpose of this section, as we see it, is to
reserve. to the aggrieved party such other remedies as may be provided by existing law, like a prosecution
for the act complained of under the Revised Penal Code. 6

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

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

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

xxx xxx xxx

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

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

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

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

It is settled that any decision rendered without jurisdiction is a total nullity and may be struck down at any
time, even on appeal before this Court. 11 The only exception is where the party raising the issue is barred
by estoppel, 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.
9. MATIENZON VS. ABELLERA, 162 SCRA 1 (1988)

G.R. No. L-45839 June 1, 1988

RUFINO MATIENZO, GODOFREDO ESPIRITU, DIOSCORRO FRANCO, AND LA SUERTE

TRANSPORTATION CORPORATION, petitioners,
vs.
HON. LEOPOLDO M. ABELLERA, ACTING CHAIRMAN OF THE BOARD OF TRANSPORTATION,
HON. GODOFREDO Q. ASUNCION, MEMBER OF THE BOARD OF TRANSPORTATION, ARTURO
DELA CRUZ, MS TRANSPORTATION CO., INC., NEW FAMILIA TRANSPORTATION CO., ROBERTO
MOJARES, ET AL., respondents.

GUTIERREZ, JR., J.:

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

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

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

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

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

SEC. 4. Transitory Provision. — Six months after the promulgation of this Decree, the Board
of Transportation, the Bureau of Transportation, The Philippine Constabulary, the city and
municipal forces, and the provincial and city fiscals shall wage a concerted and relentless
drive towards the total elimination and punishment of all clandestine and unlawful operators
of public utility motor vehicles."

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

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

The petitioners raise the following issues:

I. WHETHER OR NOT THE BOARD OF TRANSPORTATION HAS THE POWER TO

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

II. WHETHER OR NOT THE BOARD OF TRANSPORTATION HAS THE POWER TO

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

III. WHETHER OR NOT THE PROCEDURE BEING FOLLOWED BY THE BOARD IN THE
CASES IN QUESTION SATISFIES THE PROCEDURAL DUE PROCESS
REQUIREMENTS. (p. 119, Rollo)

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

5. After June 30, 1977, all provisional authorities are deemed cancelled, even if hearings on
the main application have not been terminated.

the issue is MOOT and ACADEMIC. Only the issue on legalization remains under consideration.

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

Indeed, a reading of Section 1, PD 101, shows a grant of powers to the respondent Board to issue
provisional permits as a step towards the legalization of colorum taxicab operations without the alleged time
limitation. There is nothing in Section 4, cited by the petitioners, to suggest the expiration of such powers
six (6) months after promulgation of the Decree. Rather, it merely provides for the withdrawal of the State's
waiver of its right to punish said colorum operators for their illegal acts. In other words, the cited section
declares when the period of moratorium suspending the relentless drive to eliminate illegal operators shall
end. Clearly, there is no impediment to the Board's exercise of jurisdiction under its broad powers under the
Public Service Act to issue certificates of public convenience to achieve the avowed purpose of PD 101
(Sec. 16a, Public Service Act, Nov. 7, 1936).

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

... [A]ll things considered, the question is what is the best for the interest of the public.
Whether PD 101 has lost its effectiveness or not, will in no way prevent this Board from
resolving the question in the same candor and spirit that P.D. 101 and LOI 379 were issued
to cope with the multifarious ills that plague our transport system. ... (Emphasis supplied)
(pp. 91-92, Rollo)

This, the private respondents appreciate, as they make reference to PD 101, merely to cite the compassion
with which colorum operators were dealt with under the law. They state that it is "in the same vein and
spirit that this Honorable Board has extended the Decree of legalization to the operatives of the various
PUJ and PUB services along legislative methods," that respondents pray for authorization of their colorum
units in actual operation in Metro Manila (Petitions for Legalization, Annexes E & F, par. 7, pp. 65-79,
Rollo).

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

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

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

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

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

The Board stated:

The grounds involved in the petition are of first impression. It cannot resolve the issue ex-
parte. It needs to hear the views of other parties who may have an interest, or whose interest
may be affected by any decision that this Board may take.

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

xxx xxx xxx

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

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

SO ORDERED.
10. CHUNG KA BIO VS. IAC 163 SCRA 534, 545-546 (1988)

G.R. No. 71837 July 26, 1988

CHUNG KA BIO, WELLINGTON CHUNG, CHUNG SIONG PEK, VICTORIANO CHUNG, and MANUEL
CHUNG TONG OH, petitioners,
vs.
INTERMEDIATE APPELLATE COURT (2nd Special Cases Division), SECURITIES and EXCHANGE
COMMISSION EN BANC, HON. ANTONIO R. MANABAT, HON. JAMES K. ABUGAN, HON. ANTERO
F.L. VILLAFLOR, JR., HON. SIXTO T.J. DE GUZMAN, JR., ALFREDO CHING, CHING TAN, CHIONG
TIONG TAY, CHUNG KIAT HUA, CHENG LU KUN, EMILIO TAÑEDO, ROBERTO G. CENON and
PHILIPPINE BLOOMING MILLS COMPANY, INC., respondents.

Blanco Law Firm for petitioners.

The Solicitor General for respondent SEC.

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

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

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

CRUZ, J.:

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

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

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

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

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

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

The petitioners now contend as follows:

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

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

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

4. A quo warranto proceeding is no longer necessary to dissolve a corporation which is already "deemed
dissolved" under Section 22 of the new Corporation Code.

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

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

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

SEC. 77. Every corporation whose charter expired by its own limitation or is annulled by
forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any
other manner, shall nevertheless be continued as a body corporate for three years after the
time when it would have been dissolved, for the purpose of prosecuting and defending suits
by or against it and of enabling it gradually to settle and close its affairs, to dispose of and
convey its property and to divide its capital stock, but not for the purpose of continuing the
business for which it was established."

SEC. 28-1/2. A corporation may, by action taken at any meeting of its board of directors, sell,
lease, exchange, or otherwise dispose of all or substantially all of its property and assets,
including its goodwill, upon such terms and conditions and for such considerations, which
may be money, stocks bonds, or other instruments for the payment of money or other
property or other considerations, as its board of directors deem expedient, when and as
authorized by the affirmative vote of shareholders holding shares in the corporation entitling
them to exercise at least two-thirds of the voting power on such a proposal at a
shareholders' meeting called for that purpose. Notice of such meeting shall be given to all of
the shareholders of record of the corporation whether or not they shall be entitled to vote
thereat: Provided, however, That any stockholder who did not vote to authorize the action of
the board of directors, may, within forty days after the date upon which such action was
authorized, object thereto in writing and demand payment for his shares. If, after such a
demand by a stockholder, the corporation and the stockholder can not agree upon the value
 of his share or shares at the time such corporate action was authorized, such value shall be
ascertained by three disinterested persons, one of whom shall be named by the stockholder,
another by the corporation, and the third by the two thus chosen. The finding of the
appraisers shall be final and if their award is not paid by the corporation within thirty days
after it is made, it may be recovered in an action by the stockholder against the corporation.
Upon payment by the corporation to the stockholder of the agreed or awarded price of his
shares, the stockholder shall forthwith transfer and assign the share or shares held by him
as directed by the corporation.

Unless and until such sale, lease, or exchange shall be abandoned, the stockholder making
such demand in writing ceases to be a stockholder and shall have no rights with respect to
such shares except the right to receive payment therefor as aforesaid.

A stockholder shall not be entitled to payment for his shares under the provisions of this
section unless the value of the corporate assets which would remain after such payment
would be at least equal to the aggregate amount of its debts and liabilities exclusive of
capital stock.

Nothing in this section is intended to restrict the power of any corporation, without the
authorization thereof by the shareholders, to sell, lease, exchange, or otherwise dispose of,
any of its property if thereby the corporate business be not substantially limited, or if the
proceeds of such property be appropriated to the conduct or development of its remaining
business.

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

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

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

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

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

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

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

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

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

Section 19 of the Corporation Law, part of which is now Section 22 of the Corporation Code, provided that
the powers of the corporation would cease if it did not formally organize and commence the transaction of
its business or the continuation of its works within two years from date of its incorporation. Section 20,
which has been reproduced with some modifications in Section 46 of the Corporation Code, expressly
declared that "every corporation formed under this Act, must within one month after the filing of the articles
of incorporation with the Securities and Exchange Commission, adopt a code of by-laws." Whether this
provision should be given mandatory or only directory effect remained a controversial question until it
became academic with the adoption of PD 902-A. Under this decree, it is now clear that the failure to file
by-laws within the required period is only a ground for suspension or revocation of the certificate of
registration of corporations.

Non-filing of the by-laws will not result in automatic dissolution of the corporation. Under Section 6(i) of PD
902-A, the SEC is empowered to "suspend or revoked, after proper notice and hearing, the franchise or
certificate of registration of a corporation" on the ground inter alia of "failure to file by-laws within the
required period." It is clear from this provision that there must first of all be a hearing to determine the
existence of the ground, and secondly, assuming such finding, the penalty is not necessarily revocation but
may be only suspension of the charter. In fact, under the rules and regulations of the SEC, failure to file the
by-laws on time may be penalized merely with the imposition of an administrative fine without affecting the
corporate existence of the erring firm. 21
It should be stressed in this connection that substantial compliance with conditions subsequent will suffice
to perfect corporate personality. Organization and commencement of transaction of corporate business are
but conditions subsequent and not prerequisites for acquisition of corporate personality. The adoption and
filing of by-laws is also a condition subsequent. Under Section 19 of the Corporation Code, a corporation
commences its corporate existence and juridical personality and is deemed incorporated from the date the
Securities and Exchange Commission issues certificate of incorporation under its official seal. This may be
done even before the filing of the by-laws, which under Section 46 of the Corporation Code, must be
adopted "within one month after receipt of official notice of the issuance of its certificate of incorporation."

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

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

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

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

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

Under Section 5(d), PD 902-A, as amended by PD 1758, however, it is clearly provided that such
jurisdiction may be exercised only in:

d) Petitions of corporations, partnerships or associations to be declared in the state of

suspension of payments in cases where the corporation, partnership or association possess
sufficient property to cover all its debts but foresees the impossibility of meeting them when
they respectively fall due or in cases where the corporation, partnership or association has
no sufficient assets to cover its liabilities but is under the management of a Rehabilitation
Receiver or Management Committee created pursuant to this Decree.

This section clearly does not allow a mere individual to file the petition which is limited to "corporations,
partnerships or associations." Administrative agencies like the SEC are tribunals of limited jurisdiction and,
as such, can exercise only those powers which are specifically granted to them by their enabling
statutes. 23 Consequently, where no authority is granted to hear petitions of individuals for suspension of
payments, such petitions are beyond the competence of the SEC. The analogy offered by the respondent
court is clearly inappropriate for while it is true that the Sandiganbayan may assume jurisdiction over
private individuals, it is because its charter expressly allows this in specified cases. No similar permission is
found in PD 902-A.

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

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

SO ORDERED.
11. GSIS VD. CIVIL SERVICE COMMISSION 202 SCRA 799 (1991)

G.R. No. 96938 October 15, 1991

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner,

vs.
CIVIL SERVICE COMMISSION, HEIRS OF ELIZAR NAMUCO, and HEIRS OF EUSEBIO
MANUEL, respondents.

Benigno M. Puno for private respondents.

Fetalino, Llamas-Villanueva and Noro for CSC.

NARVASA, J.:

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

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

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

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

x x x           x x x          x x x

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

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

b) declared that reinstatement of said five employees was proper, "without prejudice to the right of
the GSIS to pursue proper disciplinary action against them;"

c) MODIFIED, however, the challenged CSC Resolution of October 21, 1987 "by elminating the
payment of back salaries to private respondents (employees) until the outcome of the disciplinary
proceedings is known, considering the gravity of the offenses imputed to them ..., 2

d) ordered reinstateement only of three employees, namely: Domingo Canero, Renato Navarro and Belen Guerrero, "it appearing tht respondents Elizar Namuco and
Eusebio Manuel have since passed away." 3
On January 8, 1990, the aforesaid Resolution of July 4, 1988 having become final, the heirs of Namuco and Manuel filed a motion for execution of the Civil Service Commission
Resolution of October 21, 1987, supra. The GSIS opposed the motion. It argued that the CSC Resolution of October 21, 1987 — directing reinstatement of the employees and payment to
them of back salaries and benefits — had been superseded by the Second Division's Resolution of July 4, 1988 — precisely eliminating the payment of back salaries.

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

Once again the GSIS has come to this Court, this time praying that certiorari issue to nullify the Orders of June 20, 1990 and November 22, 1990. Here it contends that the Civil Service
Commission has no pwer to execute its judgments and final orders or resolutions, and even conceding the contrary, the writ of execution issued on June 20, 1990 is void because it varies
this Court's Resolution of July 4, 1988.

The Civil Service Commission, like the Commission on Elections and the Commission on Audit, is a consitutional commission invested by the Constitution and relevant laws not only with
authority to administer the civil service, 4
 but also with quasi-judicial powers. 5 It has the authority to hear and decide
administrative disciplinary cases instituted directly with it or brought to it on appeal. 6 The Commission shall
decide by a majority vote of all its Members any case or matter brought before it within sixty days from the
date of its submission for decision it within sixty days from the date of its submission for on certiorari by any
aggrieved party within thirty days from receipt of a copy thereof. 7 It has the power, too, sitting en banc, to
promulgate its own rules concerning pleadings and practice before it or before any of its offices, which rules
should not however diminish, increase, or modify substantive rights. 8

On October 9, 1989, the Civil Service Commission promulgated Resolution No. 89-779 adopting, approving and putting into effect simplified rules of procedure on administrative
disciplinary and protest cases, pursuant tothe authority granted by the constitutional and statutory provisions above cited, as well as Republic Act No. 6713. 9
 Those rules
provide, among other things, 10 that decision in "administrative disciplinary cases" shall be immediately
executory unless a motion for reconsideration is seasonably filed. If the decision of the Commission is
brought to the Supreme Court on certiorari, the same shall still be executory unless a restraining order or
preliminary injunction is issued by the High Court." 11 This is similar to a provision in the former Civil Service
Rules authorizing the Commissioner, "if public interest so warrants, ... (to) order his decision executed
pending appeal to the Civil Service Board of Appeals." 12 The provisions are analogous and entirely
consistent with the duty or responsibility reposed in the Chairman by PD 807, subject to policies and
resolutions adopted by the Commission, "to enforce decision on administrative discipline involving officials
of the Commission," 13 as well as with Section 37 of the same decree declaring that an appeal to the
Commission 14 "shall not stop the decision from being executory, and in case the penalty is suspension or
removal, the respondent shall be considered as having been under preventive suspension during the
pendency of the appeal in the event he wins an appeal."

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

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

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

As a major premise, it has been the repeated pronouncement of this Supreme Tribunal that the Civil
Service Commissioner has the discretion toorder the immediate execution in the public interst of his
decision separating petitioner-appellant from the service, always sbuject however to the rule that, in
the event the Civil Service Board of Appeals or the proper court determines that his dismissal is
illegal, he should be paid the salary corresponding to the period of his separation from the service
unitl his reinstatement.
Petitioner GSIS concedes that the heirs of Namuco and Manuel "are entitled tothe retirement/death and
other benefits due them as government employees" since, at the time of their death, they "can be
considered not to have been separated from the separated from the service." 16

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

This Court's Resolution of July 4, 1988, as already stated, modified the Civil Service Commission's
Resolution of October 21, 1987 — inter alia granting back salaries tothe five dismissed employees,
including Namuco and Manuel — and pertinently reads as follows:

We modify the said Order, however, by eliminating the payment of back salaries to private
respondents until the outcome of the disciplinary proceedings is known, considering the gravity of
the offense imputed to them in connection with the irregularities in the canvass of supplies and
materials at the GSIS.

The reinstatement order shall apply only to respondents Domingo Canero, Renato Navarro and
Belen Guerrero, it appearing that respondents Elizar Namuco and Eusebio Manuel have since
passed away. ....

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

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

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

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

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

SO ORDERED.