Admin Law Cases (Part I and II)

8/10/2019 Admin Law Cases (Part I and II)

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Administrative Bodies

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. ObjectivesThe 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 ofiron 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 involvedif 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. 1When 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


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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 andimprovements 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."3The 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(Bracketssupplied)

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 expropriationif 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


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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 civilaction.

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 aspersons 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 lawto 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 facilitiesfor 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 corporateform, that is to say, are incorporated agenciesor

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;7National Housing Authority;8Philippine National Oil Company;9Philippine National Railways; 10

Public Estates Authority; 11Philippine Virginia Tobacco Administration,12and 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.


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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, theprovincial, 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 Republicof 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.


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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. 13In the instant case, the Republic has precisely

moved to take over the proceedings as party-plaintiff.

InE.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court,14

the Court recognized that the Republic may initiate orparticipate 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)

InE.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 ofsuits. 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 continuin g or standing delegation ofauthority 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.ThePresident shalldetermine 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)


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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.

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

Footnotes

1 Second paragraph, Section 1, P.D. No. 272.

2 The relevant terms of LOI No. 1277 read as follows:

"(2) In the event that NSC and MCFC fail to agree on the foregoing within sixty (60) days from the date hereof, the Iron and SteelAuthority (ISA) shall exercise its authority under Presidential Decree (PD) No. 272, as amended, to initiate the expropriation of

the aforementioned occupancy rights of MCFC on the subject lands as well as the plant, structures, equipment, machinery and

related facilities, for and on behalf of NSC, and thereafter cede the same to NSC. During the pendency of the expopriation

proceedings, NSC shall take possession of the property, subject to bonding and other requirements of P.D. No. 1533.

xxx xxx xxx

3 Section 1, Rule 3.

4 Section 16, Rule 3 of the Rules of Court reads:

"Sec. 16.Duty of attorney upon death, incapacity or incompetency of party.Whenever a party to a pending case dies becomes

incapacitated or incompetent, it shall be the duty of his attorney to inform the court promptly of such death, incapacity or

incompetency, and to give the name and residence of his executor, administrator, guardian or other legal representative."

5 RTC Order dated 22 March 1989, p. 2; CARollo, p. 24.

6 Section 2, Republic Act No. 6395, 10 September 1971.

7 Section 4, Presidential Decree No. 857, 23 December 1975.

8 Section 2, Presidential Decree No. 757, 31 July 1975.


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9 Section 3, Presidential Decree No. 334, 9 November 1973.

10 Section 1, Republic Act No. 4156, 20 June 1964.

11 Sections 3 and 5, Presidential Decree No. 1084, 4 February 1977.

12 Sections 3 and 4(k), Republic Act No. 2265, 19 June 1959.

13 Rule 3, Section 11, Rules of Court. See, in this connection, St. Anne Medical Center v. Parel (176 SCRA 755 [1989]), where the

petition had been filed in the name of "St. Anne Medical Center" which was not a juridical person and where this Court invoked Rule3, Section 11 and impleaded the real party-in-interest.

14 147 SCRA 276 (1987).

15 147 SCRA at 279.

16 146 SCRA at 279. In Lagazon v. Reyes (166 SCRA 386 [1988]), the Court said that

"the aim of [Rule 3, Section 11] is that all persons materially interested, legally or beneficially, in the subject matter of the suit

should be made parties to it in order that the whole matter in dispute may be determined once and for all in one litigation, thus

avoiding multiplicity of suits . . . ." (166 SCRA at 392)

17 Letter of 28 September 1988; Records, p. 1297.

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 asVOLUNTARY 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.


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Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government to forego their right to strike and

are compelled to accept the resolution of their dispute through arbitration by a third party. 1The essence of arbitration remains since aresolution of a dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the parties, but in

compulsory arbitration, such a third party is normally appointed by the government.

Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause in

their collective agreement, to an impartial third person for a final and binding resolution. 2Ideally, arbitration awards are supposed tobe 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.3For this purpose, parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or includea 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 anddecide, 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.4The state of our present law relating to voluntary arbitration provides that "(t)he award or decision of theVoluntary Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by

the parties,"5while the "(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commissionby any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders." 6Hence, while there is anexpress 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,7in effect equating the voluntary arbitrator with the NLRC or the Court of Appeals. In the view of theCourt, this is illogical and imposes an unnecessary burden upon it.

In Volkschel Labor Union, et al. v.NLRC, et al.,8on the settled premise that the judgments of courts and awards of quasi-judicialagencies 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


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al.,9this Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity." Under these rulings, itfollows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agencybut

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, theEmployees 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,11that the

broader term "instrumentalities" was purposely included in the above-quoted provision.

An "instrumentality" is anything used as a means or agency.12Thus, 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.13The word "instrumentality," with respect to a state, contemplates an authority to which the state delegates

governmental power for the performance of a state function. 14An individual person, like an administrator or executor, is a judicial

instrumentality in the settling of an estate, 15in the same manner that a sub-agent appointed by a bankruptcy court is an instrumentality

of the court,16and 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 foregoingrationalization, 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 entities18not 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 certiorarifrom 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.


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SO ORDERED.

Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco and Hermosisima, Jr., JJ., concur.

Feliciano, J., concurs in the result.

Narvasa, C.J. and Melo, J. are on leave.

Footnotes

1 Seide, A Dictionary of Arbitration (1970).

2Ibid.

3 Art. 260, Labor Code.


5 Art. 262-A, par. 4, Labor Code.


7 Oceanic Bic Division (FFW), et al. v. Romero, et al., 130 SCRA 392 (1984); Sime Darby Pilipinas, Inc. v. Magsalin, et al., 180

SCRA 177 (1989).

8 98 SCRA 314 (1980).

9 Supra.

10 Art. 262-A, in relation to Art. 217 (b) and (c), Labor Code, as amended by Sec. 9, R.A. 6715.

11 Executive Order No. 1008.

12 Laurens Federal Sav. and Loan Ass'n v. South Carolina Tax Commission, 112 S.E. 2d 716, 719, 236 S.C. 2.

13 Govt. of P.I. v. Springer, et al., 50 Phil. 259, 334 (1927).

14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc. 528.

15 In re Turncock's Estate, 300 N.W. 155, 156, 238 Wis. 438.

16 In re Brown Co., D.C. Me., 36 F. Supp. 275, 277.

17 Gagne v. Brush, D.C.N.H., 30 F. Supp. 714, 716.

18 First Lepanto Ceramics, Inc. v. CA, et al., 231 SCRA 30 (1994).

19 Section 23, R.A. No. 876.

G.R. No. 112309 July 28, 1994

NAPOLEON V. FERNANDO, ANDRES DIZON, TOMAS F. FALCONITIN and ADAP, Mediator Arbiters, National CapitalRegion, Department of Labor and Employment, petitioners, vs.HON. PATRICIA STO. TOMAS, in her capacity as Chairman, Civil Service Commission; RAMON P. ERENETA, JR. andTHELMA P. GAMINDE, in their capacities as Commissioners of the Civil Service Commission; and HON. MA. NIEVES R.CONFESOR, in her capacity as Secretary, Department of Labor and Employment, respondents.


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R E S O L U T I O N

REGALADO, J.:

The present petition for certiorari seeks to annul: (a) Resolution No. 93-4480 1of the Civil Service Commission, dated October 12,1993, which declared the reassignment of petitioners valid and legal; (b) the Order, dated July 26, 1993, 2of the Secretary of Labor,Hon. Ma. Nieves R. Confesor, placing petitioners under preventive suspension for ninety (90) days pending investigation of the charge

against them for gross insubordination; and (c) the Order, dated October 25, 1993, 3of the said Secretary of Labor finding petitionersguilty of two counts of gross insubordination and accordingly suspending them for one (1) year.

Petitioners were appointed as Mediator Arbiters in the National Capital Region and, as such, were discharging their duties as hearing

officers when respondent Labor Secretary Confessor issued on May 26, 1993 Memorandum Order No. 4 4reassigning several med-arbiters, including herein petitioners, which reads as follows:

In the interest of the service and in order to expedite the resolution of inter-union and intra-union cases, the following assignment

of

Med-Arbiters is hereby being made effective immediately:

Appeals and Review Unit, OS:

Andres Dizon

Tomas Falconitin

Napoleon Fernando

Bureau of Labor Relations:

Paterno Adap

National Capital Region

Brigida Fadrigon

Angeli Tuyay

Region IV:

Anastacio Bactin

xxx xxx xxx

Med-Arbiters Brigida Fadrigon, Angeli Tuyay and Anastacio Bactin promptly complied with the memorandum order. However,

petitioners, in a letter dated June 7, 1993, 5sought the reconsideration and recall of said memorandum order on the ground that theirreassignments were made without their consent, which was accordingly tantamount to removal without just cause.

On June 23, 1993, respondent Secretary of Labor issued another Memorandum6declaring and clarifying that Memorandum Order No.4 contemplates, not a transfer as erroneously alleged, but a mere reassignment wherein the consent of petitioners is not required, and

ordering petitioners to report to their new assignments and to turn over all records of cases and other documents in their possession.

Petitioners, however, refused to comply and instead wrote another letter, dated June 28, 1993,7

seeking the reconsideration ofMemorandum Order No. 4 and the Memorandum of June 23, 1993, on the ground that the same were issued in violation of their rightsto security of tenure and due process of law.

Acting on petitioners' letter, respondent Secretary issued another Memorandum, dated July 7, 1993, 8denying their request anddirecting them to show cause why they should not be administratively charged for gross insubordination.

On July 12, 1993, petitioners filed an appeal9with the Merit System and Protection Board (MSPB) of the Civil Service Commission(CSC), and a supplemental appeal10dated July 19, 1993.

On July 15, 1993, petitioners submitted their explanation in compliance with the Memorandum of July 7, 1993, arguing that they

could not accept their reassignment considering that the same is unconstitutional, illegal and without valid cause; that quasi-judicial


12/38

officers may not be transferred or reassigned except on grounds provided by law; and that the law provides that pending their appeal to

the Civil Service Commission, their transfer or reassignment should be held in abeyance.

On July 26, 1993, petitioners were formally charged with gross insubordination and, pending investigation, were placed under

preventive suspension for ninety (90) days.

On October 12, 1993, the CSC issued its questioned resolution finding the reassignment of petitioners valid and legal and,

consequently, dismissed their appeal for lack of merit.

On October 25, 1993, respondent Secretary issued another Order finding petitioners guilty of two counts of gross insubordination andaccordingly suspending them from the service for one (1) year.

Hence, this petition assailing the foregoing resolution and orders.

Petitioners first contend that the CSC has no jurisdiction to review on appeal the aforestated Memorandum Order No. 4 as the same is

vested in the MSPB pursuant to Section 13, Book V of Executive Order No. 292 (Administrative Code of 1987). There is no merit in

the argument.

Resolution No. 93-238711of the CSC, which took effect on July 1, 1993, declared the abolition of the MSPB in order to streamline theoperations of the CSC, so as to achieve a speedier delivery of administrative justice and economical operation without impairing due

process and the substantive rights of the parties in administrative cases. Henceforth, decisions in administrative cases involving

officials and employees of the civil service appealable to the Commission, including personnel actions, shall be appealed directly to

the Commission and not to the MSPB, and those cases which have been appealed or brought directly to the MSPB shall be elevated to

the Commission for final resolution. In the present case, petitioner's appeal was filed only on July 12, 1993 when Resolution No. 93-

2387 was already in effect. Perforce, their appeal was considered filed before the CSC.

Petitioners claim that there was malice, bad faith, undue influence and partiality in the issuance of the order for reassignment and its

affirmance by the CSC. They aver that there was undue influence exerted by respondent Secretary and that the CSC acted with

partiality because respondent Secretary and CSC Chairman Sto. Tomas are personal friends, aside from the fact that during the

pendency of their appeal with the CSC, the latter issued legal opinions through its Director for Legal Affairs concerning the very

issues involved in the appeal even before the same could be officially resolved. Furthermore, petitioner Fernando specifically asserts

that the reassignment was actually in retaliation for the independent stance he has taken in Case No. OD-M-9301-028 (APSOTEU vs.

EEI) pending before him wherein he ordered the cancellation of the certificate of registration of APSOTEU. These allegations of

petitioners should be considered as mere speculations and conjectures, no substantial evidence having been presented in support

thereof.

The reassignment of petitioners was made "in the interest of the service and in order to expedite the resolution of inter-union and intra-

union cases." That the order was issued for this purpose is even presumed under Civil Service rules where there is no proof of

harassment, coercion, intimidation, or other personal reasons therefor.

Additionally, public respondents have in their favor the presumption of regularity in the performance of official duties which

petitioners failed to rebut when they did not present evidence to prove partiality, malice and bad faith. Bad faith can never be

presumed; it must be proved by clear and convincing evidence. No such evidence exists in the case at bar. The circumstances

attending the issuance of Memorandum Order No. 4 do not in any way reveal any malicious intent on the part of respondent Secretary.

On the contrary, we consider her actions as a valid exercise of her power and authority as department head to take and enforce

personnel actions.

It is likewise argued that the reassignment of petitioners is tantamount to their constructive dismissal because it was effected withouttheir consent. In the case ofBentain vs. Court of Appeals,12we categorically held that a reassignment in good faith and in the interestof the government service is permissible and valid even without the employee's prior consent.

The reassignment is also challenged as being illegal because it involves a reduction in rank and status, and it violates the right to

security of tenure and to due process of law. Petitioners contend that with the reassignment, their functions were changed from those

of a hearing officer to the drafting of decisions appealed to the Secretary. In their view, they were in effect demoted.

A demotion, under Section 11, Rule VII of the Omnibus Rules Implementing Book V of Executive Order No. 292, is defined as the

movement from one position to another involving the issuance of an appointment with diminution in duties, responsibilities, status or

rank which may or may not involve reduction in salary. On the other hand, Section 10 of the same rule defines a reassignment as the

movement of an employee from one organizational unit to another in the same department or agency which does not involve a


13/38

reduction in rank, status, or salary and does not require the issuance of an appointment. A demotion, therefore, involves the issuance

of an appointment.

In the case at bar, it is clear and undisputed that no new appointments were issued to herein petitioners. Hence, it is incorrect for them

to claim that they were demoted. Moreover, petitioners failed to sufficiently establish that there was a reduction in their salary. They

would want to suggest that there was a diminution in rank in the sense that their present assignment as drafters of decisions on appeal

to the Secretary are subject to review by higher authority, whereas in their former assignment as hearing officers, they themselves

render judgment. Petitioners seem to forget that the decisions of hearing officers are also subject to review by the National Labor

Relations Commission. Thus unmasked, their argument has definitely no leg to stand on.

Petitioners were appointed as Mediator Arbiters in the National Capital Region. They were not, however, appointed to a specific

station or particular unit of the Department of Labor in the National Capital Region (DOLE-NCR). Consequently, they can always be

reassigned from one organizational unit to another of the same agency where, in the opinion of respondent Secretary, their services

may be used more effectively. As such they can neither claim a vested right to the station to which they were assigned nor to security

of tenure thereat. As correctly observed by the Solicitor General, petitioners' reassignment is not a transfer for they were not removed

from their position as med-arbiters. They were not given new appointments to new positions. It indubitably follows, therefore, that

Memorandum Order No. 4 ordering their reassignment in the interest of the service is legally in order.

Whatever alleged procedural infirmity may have rendered defective the issuance of Memorandum Order No. 4 has been cured when

petitioners filed two motions for reconsideration seeking to recall the same. The two motions were duly considered, discussed and

resolved by respondent Secretary. Petitioners were thereby afforded full opportunity to present their arguments against the issuance of

said order.

Finally, we do not deem it appropriate to rule on the merits of the order issued on July 26, 1993 by respondent Secretary preventively

suspending petitioners for ninety (90) days, as well as her subsequent order dated October 25, 1993 finding petitioners guilty of

insubordination and imposing on them the penalty of suspension of one (1) year. Evidently, herein petitioners, in asking us to resolve

the issues thereon in their present recourse, have overlooked or deliberately ignored the fact that the same are clearly dismissible for

non-exhaustion of administrative remedies.

On the first aspect, petitioners allowed the 90-day period ofpreventive suspension to lapse without appealing from the Order of July

26, 1993. In fact, the investigation which necessitated such suspension has long since been concluded and thereafter resulted in the

condemnatory Order of October 25, 1993. Hence, they are now clearly estopped from invoking the certiorarijurisdiction of this Court

in a belated attempt to seek redress from the first Order.

Secondly, as stated earlier, the Order dated October 25, 1993 imposing apunitive suspension of one year on herein petitioners cannot

be the proper subject of a petition for certiorari for their failure to exhaust administrative remedies. Presidential Decree No. 807 andExecutive Order No. 292 explicitly provide that administrative disciplinary cases involving the imposition of a penalty of suspension

for more than thirty (30) days are appealable to the Civil Service Commission. 13Not having fully exhausted the remedy available tothem, petitioners cannot resort to their present judicial action which is both premature at this juncture and proscribed by Rule 65 of the

Rules of Court. Neither do we find any of the exceptions to the doctrine of exhaustion of administrative remedies which could be

applicable to the instant case, nor have petitioners essayed any submission on that score.

WHEREFORE, no jurisdictional error or any grave abuse of discretion having been shown to have flawed or tainted the impugned

resolution of respondent Chairman of the Civil Service Commission or the challenged orders of respondent Secretary of Labor, the

present petition for certiorari is hereby DISMISSED.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Davide, Jr., Romero, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

Bellosillo, J., is on leave.

#Footnotes

1 Annex A, Petition;Rollo, 47.

2 Annex S, id.; ibid., 173.

3 Annex B, id.; ibid., 49.


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4 Annex I, id.; ibid., 98.

5 Annex J, id.; ibid., 99.

6 Annex L, id.; ibid., 112.

7 Annex M, id.; ibid., 115.

8 Annex O, id.; ibid., 161.

9 Annex N, id.; ibid., 125.

10 Annex N-1, id.; ibid., 152.

11 This was issued pursuant to Section 17, Book V, Administrative Code of 1987, which provides that "as an independent

Constitutional body, the Commission may effect changes in the organization as the need arises."

12 G.R. No. 89452, June 5, 1992, 209 SCRA 644.

13 Section 37, Presidential Decree No. 807 and Section 47, Executive Order No. 292

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 wasrecommended to the President for a CESO rank by the Career Executive Service Board. 1

All was not to turn well for petitioner. On October 1, 1993, respondent Civil Service Commission 2passed 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;


15/38

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 autonomyand 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.


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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, 19744which adopted the Integrated Plan. Article IV, Chapter I, Part of the III of the said Plan provides:

Article IVCareer 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-officiomembers 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, 5viz:

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 whetherthese duties shall be attached to and become ex-officioduties 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:


17/38

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 implementpolicies, 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 Boardcomposed of a Chairman and two (2) members shall have the following functions:

xxx xxx xxx

(3) The Office of Legal Affairsshall 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 Managementshall 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,


18/38

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."6The essential autonomous character of the CESB is not negated by its attachment to respondent Commission. By saidattachment, 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 withoutvoting 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 ofDatumanong, 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.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Vitug, Kapunan and Mendoza,

JJ., concur.

Footnotes

1 Together with twenty-six (26) others.

2 Patricia A. Sto. Tomas (Chairman), Ramon P. Ereneta, Jr., (member) and Thelma P. Gaminde (member).

3 On February 13, 1995, respondent CSC manifested that the President appointed petitioner to CESO rank on January 9, 1995. Her

appointment, however, has not rendered moot the broader issue of whether or not the abolition of Career Executive Service Board is

valid.

4 P. D. No. 1 was later amended by P.D. No. 336 and P.D. No. 367 on the composition of the CESB; P.D. No. 807 and E.O. No. 292

(Administrative Code of 1987) reiterated the functions of the CESB. The General Appropriations Acts from 1975 to 1993 alsouniformly appropriated funds for the CESB.

5 63 AM JUR 2d section 30.


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6 Reorganization Panel Reports, Vol. II, pp. 16 to 49 as citedin Petition, p. 17.

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

NATIONAL LAND TITLES AND DEEDS REGISTRATION ADMINISTRATION, petitioner, vs.

CIVIL SERVICE COMMISSION and VIOLETA L. GARCIA, respondents.

The Solicitor General for petitioner.

Raul R. Estrella for private respondent.

SYLLABUS

1. ADMINISTRATIVE LAW; EXECUTIVE ORDER NO. 649; REORGANIZED LAND REGISTRATION COMMISSION TO

NALTDRA; EXPRESSLY PROVIDED THE ABOLITION OF EXISTING POSITIONS. Executive Order No. 649 authorized the

reorganization of the Land Registration Commission (LRC) into the National Land Titles and Deeds Registration Administration

(NALTDRA). It abolished all the positions in the now defunct LRC and required new appointments to be issued to all employees of

the NALTDRA. The question of whether or not a law abolishes an office is one of legislative intent about which there can be no

controversy whatsoever if there is an explicit declaration in the law itself. A closer examination of Executive Order No. 649 which

authorized the reorganization of the Land Registration Commission (LRC) into the National Land Titles and Deeds Registration

Administration (NALTDRA), reveals that said law in express terms, provided for the abolition of existing positions. Thus, without

need of any interpretation, the law mandates that from the moment an implementing order is issued, all positions in the LandRegistration Commission are deemed non-existent. This, however, does not mean removal. Abolition of a position does not involve or

mean removal for the reason that removal implies that the post subsists and that one is merely separated therefrom. (Arao vs. Luspo,

20 SCRA 722 [1967]) After abolition, there is in law no occupant. Thus, there can be no tenure to speak of. It is in this sense that from

the standpoint of strict law, the question of any impairment of security of tenure does not arise. (De la Llana vs. Alba, 112 SCRA 294

[1982])

2. ID.; ID.; ID.; REORGANIZATION, VALID WHEN PURSUED IN GOOD FAITH; CASE AT BAR. Nothing is better settled

in our law than that the abolition of an office within the competence of a legitimate body if done in good faith suffers from no

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

There is no dispute over the authority to carry out a valid reorganization in any branch or agency of the Government. Under Section 9,

Article XVII of the 1973 Constitution. The power to reorganize is, however; not absolute. We have held in Dario vs. Mison that

reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith. This court has pronounced that

if the newly created office has substantially new, different or additional functions, duties or powers, so that it may be said in fact to

create an office different from the one abolished, even though it embraces all or some of the duties of the old office it will be

considered as an abolition of one office and the creation of a new or different one. The same is true if one office is abolished and its

duties, for reasons of economy are given to an existing officer or office. Executive Order No. 649 was enacted to improve the services

and better systematize the operation of the Land Registration Commission. A reorganization is carried out in good faith if it is for the

purpose of economy or to make bureaucracy more efficient. To this end, the requirement of Bar membership to qualify for key

positions in the NALTDRA was imposed to meet the changing circumstances and new development of the times. Private respondent

Garcia who formerly held the position of Deputy Register of Deeds II did not have such qualification. It is thus clear that she cannot

hold any key position in the NALTDRA, The additional qualification was not intended to remove her from office. Rather, it was a

criterion imposed concomitant with a valid reorganization measure.

3. ID.; ID.; ID.; THERE IS NO VESTED PROPERTY RIGHT TO BE RE-EMPLOYED IN A REORGANIZED OFFICE; CASE AT

BAR.There is no such thing as a vested interest or an estate in an office, or even an absolute right to hold it. Except constitutional

offices which provide for special immunity as regards salary and tenure, no one can be said to have any vested right in an office or its

salary. None of the exceptions to this rule are obtaining in this case. To reiterate, the position which private respondent Garcia would

like to occupy anew was abolished pursuant to Executive Order No. 649, a valid reorganization measure. There is no vested property

right to be re employed in a reorganized office. Not being a member of the Bar, the minimum requirement to qualify under the

reorganization law for permanent appointment as Deputy Register of Deeds II, she cannot be reinstated to her former position without

violating the express mandate of the law.

D E C I S I O N

CAMPOS, JR., J p:

The sole issue for our consideration in this case is whether or not membership in the bar, which is the qualification requirement

prescribed for appointment to the position of Deputy Register of Deeds under Section 4 of Executive Order No. 649 (Reorganizing the


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Land Registration Commission (LRC) into the National Land Titles and Deeds Registration Administration or NALTDRA) should be

required of and/or applied only to new applicants and not to those who were already in the service of the LRC as deputy register of

deeds at the time of the issuance and implementation of the abovesaid Executive Order.

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

"The records show that in 1977, petitioner Garcia, a Bachelor of Laws graduate and a first grade civil service eligible was appointed

Deputy Register of Deeds VII under permanent status. Said position was later reclassified to Deputy Register of Deeds III pursuant to

PD 1529, to which position, petitioner was also appointed under permanent status up to September 1984. She was for two years, more

or less, designated as Acting Branch Register of Deeds of Meycauayan, Bulacan. By virtue of Executive Order No. 649 (which tookeffect on February 9, 1981) which authorized the restructuring of the Land Registration Commission to National Land Titles and

Deeds Registration Administration and regionalizing the Offices of the Registers therein, petitioner Garcia was issued an appointment

as Deputy Register of Deeds II on October 1, 1984, under temporary status, for not being a member of the Philippine Bar. She

appealed to the Secretary of Justice but her request was denied. Petitioner Garcia moved for reconsideration but her motion remained

unacted. On October 23, 1984, petitioner Garcia was administratively charged with Conduct Prejudicial to the Best Interest of the

Service. While said case was pending decision, her temporary appointment as such was renewed in 1985. In a Memorandum dated

October 30, 1986, the then Minister, now Secretary, of Justice notified petitioner Garcia of the termination of her services as Deputy

Register of Deeds II on the ground that she was "receiving bribe money". Said Memorandum of Termination which took effect on

February 9, 1987, was the subject of an appeal to the Inter-Agency Review Committee which in turn referred the appeal to the Merit

Systems Protection Board (MSPB).

In its Order dated July 6, 1987, the MSPB dropped the appeal of petitioner Garcia on the ground that since the termination of her

services was due to the expiration of her temporary appointment, her separation is in order. Her motion for reconsideration was deniedon similar ground." 1

However, in its Resolution 2 dated June 30, 1988, the Civil Service Commission directed that private respondent Garcia be restored to

her position as Deputy Register of Deeds II or its equivalent in the NALTDRA. It held that "under the vested right theory the new

requirement of BAR membership to qualify for permanent appointment as Deputy Register of Deeds II or higher as mandated under

said Executive Order, would not apply to her (private respondent Garcia) but only to the filling up of vacant lawyer positions on or

after February 9, 1981, the date said Executive Order took effect." 3 A fortiori, since private respondent Garcia had been holding the

position of Deputy Register of Deeds II from 1977 to September 1984, she should not be affected by the operation on February 1,

1981 of Executive Order No. 649.

Petitioner NALTDRA filed the present petition to assail the validity of the above Resolution of the Civil Service Commission. It

contends that Sections 8 and 10 of Executive Order No. 649 abolished all existing positions in the LRC and transferred their functions

to the appropriate new offices created by said Executive Order, which newly created offices required the issuance of newappointments to qualified office holders. Verily, Executive Order No. 649 applies to private respondent Garcia, and not being a

member of the Bar, she cannot be reinstated to her former position as Deputy Register of Deeds II.

We find merit in the petition.

Executive Order No. 649 authorized the reorganization of the Land Registration Commission (LRC) into the National Land Titles and

Deeds Registration Administration (NALTDRA). It abolished all the positions in the now defunct LRC and required new

appointments to be issued to all employees of the NALTDRA.

The question of whether or not a law abolishes an office is one of legislative intent about which there can be no controversy

whatsoever if there is an explicit declaration in the law itself. 4 A closer examination of Executive Order No. 649 which authorized the

reorganization of the Land Registration Commission (LRC) into the National Land Titles and Deeds Registration Administration

(NALTDRA), reveals that said law in express terms, provided for the abolition of existing positions, to wit:

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

All structural units in the Land Registration Commission and in the registries of deeds, and all Positions therein shall cease to exist

from the date specified in the implementing order to be issued by the President pursuant to the preceding paragraph. Their pertinent

functions, applicable appropriations, records, equipment and property shall be transferred to the appropriate staff or offices therein

created. (Emphasis Supplied.)

Thus, without need of any interpretation, the law mandates that from the moment an implementing order is issued, all positions in the

Land Registration Commission are deemed non-existent. This, however, does not mean removal. Abolition of a position does not

involve or mean removal for the reason that removal implies that the post subsists and that one is merely separated therefrom. 5 After


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abolition, there is in law no occupant. Thus, there can be no tenure to speak of. It is in this sense that from the standpoint of strict law,

the question of any impairment of security of tenure does not arise. 6

Nothing is better sett

Admin Law Cases (Part I and II)

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Transcript of Admin Law Cases (Part I and II)