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MECANO vs.

COA
March 26, 2011 ~ vbdiaz

MECANO vs.COA

G.R. No. 103982

December 11, 1992

FACTS: Mecano is a Director II of the NBI. He was hospitalized and on account of which he
incurred medical and hospitalization expenses, the total amount of which he is claiming from the
COA.

In a memorandum to the NBI Director, Director Lim requested reimbursement for his expenses
on the ground that he is entitled to the benefits under Section 699 of the RAC, the pertinent
provisions of which read:

Sec. 699. Allowances in case of injury, death, or sickness incurred in performance of duty.
When a person in the service of the national government of a province, city, municipality or
municipal district is so injured in the performance of duty as thereby to receive some actual
physical hurt or wound, the proper Head of Department may direct that absence during any
period of disability thereby occasioned shall be on full pay, though not more than six months,
and in such case he may in his discretion also authorize the payment of the medical attendance,
necessary transportation, subsistence and hospital fees of the injured person. Absence in the case
contemplated shall be charged first against vacation leave, if any there be.

xxx xxx xxx

In case of sickness caused by or connected directly with the performance of some act in the line
of duty, the Department head may in his discretion authorize the payment of the necessary
hospital fees.

Director Lim then forwarded petitioners claim, to the Secretary of Justice. Finding petitioners
illness to be service-connected, the Committee on Physical Examination of the Department of
Justice favorably recommended the payment of petitioners claim.

However, then Undersecretary of Justice Bello III returned petitioners claim to Director Lim,
having considered the statements of the Chairman of the COA to the effect that the RAC
being relied upon was repealed by the Administrative Code of 1987.

Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 1991 of
then Secretary of Justice Drilon stating that the issuance of the Administrative Code did not
operate to repeal or abregate in its entirety the Revised Administrative Code, including the
particular Section 699 of the latter.

Director Lim transmitted anew Mecanos claim to then Undersecretary Bello for favorable
consideration; Secretary Drilon forwarded petitioners claim to the COA Chairman,
recommending payment of the same. COA Chairman however, denied petitioners claim on the
ground that Section 699 of the RAC had been repealed by the Administrative Code of 1987,
solely for the reason that the same section was not restated nor re-enacted in the
Administrative Code of 1987. He commented, however, that the claim may be filed with the
Employees Compensation Commission, considering that the illness of Director Mecano
occurred after the effectivity of the Administrative Code of 1987.

Eventually, petitioners claim was returned by Undersecretary of Justice Montenegro to Director


Lim with the advice that petitioner elevate the matter to the Supreme Court if he so desires.

Hence this petition for certiorari.

ISSUE: 1. WON the Administrative Code of 1987 repealed or abrogated Section 699 of the
RAC

HELD: The Court resolves to GRANT the petition; respondent is hereby ordered to give due
course to petitioners claim for benefits

NO

The question of whether a particular law has been repealed or not by a subsequent law is a matter
of legislative intent. The lawmakers may expressly repeal a law by incorporating therein a
repealing provision which expressly and specifically cites the particular law or laws, and portions
thereof, that are intended to be repealed. A declaration in a statute, usually in its repealing clause,
that a particular and specific law, identified by its number or title, is repealed is an express
repeal; all others are implied repeals

In the case of the two Administrative Codes in question, the ascertainment of whether or not it
was the intent of the legislature to supplant the old Code with the new Code partly depends on
the scrutiny of the repealing clause of the new Code. This provision is found in Section 27, Book
VII (Final Provisions) of the Administrative Code of 1987 which reads:

Sec. 27. Repealing Clause. All laws, decrees, orders, rules and regulations, or portions
thereof, inconsistent with this Code are hereby repealed or modified accordingly.

The question that should be asked is: What is the nature of this repealing clause?

It is certainly not an express repealing clause because it fails to identify or designate the act or
acts that are intended to be repealed. Rather, it is an example of a general repealing
provision. It is a clause which predicates the intended repeal under the condition that substantial
conflict must be found in existing and prior acts. This latter situation falls under the category of
an implied repeal.

There are two categories of repeal by implication.

1. Where provisions in the two acts on the same subject matter are in an irreconcilable
conflict, the later act to the extent of the conflict constitutes an implied repeal of the
earlier one.
2. 2. If the later act covers the whole subject of the earlier one and is clearly intended as a
substitute, it will operate to repeal the earlier law.

Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover
the entire subject matter of the old Code. There are several matters treated in the old Code which
are not found in the new Code, such as the provisions on notaries public, the leave law, the
public bonding law, military reservations, claims for sickness benefits under Section 699, and
still others.

According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent
to cover only those aspects of government that pertain to administration, organization and
procedure, understandably because of the many changes that transpired in the government
structure since the enactment of the RAC decades of years ago.

Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of
the subject claim are in an irreconcilable conflict. In fact, there can be no such conflict because
the provision on sickness benefits of the nature being claimed by petitioner has not been restated
in the Administrative Code of 1987.

Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication are
not favored. 20 The presumption is against inconsistency and repugnancy for the legislature is
presumed to know the existing laws on the subject and not to have enacted inconsistent or
conflicting statutes.

NOTES:

1. the COA would have Us consider that the fact that Section 699 was not restated in the
Administrative Code of 1987 meant that the same section had been repealed. The COA anchored
this argument on the whereas clause of the 1987 Code, which states:

WHEREAS, the effectiveness of the Government will be enhanced by a new Administrative


Code which incorporate in a unified document the major structural, functional and procedural
principles and rules of governance; and

xxx xxx xxx


It argues, in effect, that what is contemplated is only one Code the Administrative Code of
1987. This contention is untenable.

The fact that a later enactment may relate to the same subject matter as that of an earlier statute is
not of itself sufficient to cause an implied repeal of the prior act, since the new statute may
merely be cumulative or a continuation of the old one. What is necessary is a manifest
indication of legislative purpose to repeal.

2. Regarding COA contention that recovery under this subject section (699) shall bar the
recovery of benefits under the Employees Compensation Program, the same cannot be upheld.
The second sentence of Article 173, Chapter II, Title II (dealing on Employees Compensation
and State Insurance Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly
provides that the payment of compensation under this Title shall not bar the recovery of benefits
as provided for in Section 699 of the Revised Administrative Code . . . whose benefits are
administered by the system (meaning SSS or GSIS) or by other agencies of the government.

LEVERIZA et al vs. IAC, Mobil oil and CAA


March 26, 2011 ~ vbdiaz

LEVERIZA et al vs. IAC, Mobil oil and CAA

G.R. No. L-66614

January 25, 1988

FACTS: Around three contracts of lease resolve the basic issues in the instant case:

Contract A a lease contract of April 2, 1965 between the Republic of the Philippines,
represented by Civil Aeronautics Administration (CAA) and. Leveriza over a parcel of land
containing an area of 4,502 square meters, for 25 years.

Contract B a lease contract (in effect a sublease) of May 21, 1965 between Leveriza and
Mobil Oil Philippines, Inc., over the same parcel of land, but reduced to 3,000 square meters for
25 years; and

Contract C a lease contract of June 1, 1968 between defendant CAA and plaintiff Mobil Oil
over the same parcel of land, but reduced to 3,000 square meters, for 25 years.

There is no dispute among the parties that the subject matter of the three contracts of lease above
mentioned, Contract A, Contract B, and Contract C, is the same parcel of land, with the noted
difference that while in Contract A, the area leased is 4,502 square meters, in Contract B and
Contract C, the area has been reduced to 3,000 square meters.
It is important to note, for a clear understanding of the issues involved, that it appears that
defendant CAA as LESSOR, leased the same parcel of land, for durations of time that
overlapped to two lessees, to wit: (1) Leveriza and Mobil Oil, and the latter, as LESSEE, leased
the same parcel of land from two lessors, to wit: (1) Leveriza and (2) CAA for durations of time
that also overlapped.

Leveriza, the lessee in Contract A and the lessor in Contract B, is now deceased. This is the
reason why her successor-in-interest, her heirs, are sued. For purposes of brevity, these
defendants shall be referred to hereinafter as Defendants Leveriza.

Mobil Oil seeks the rescission or cancellation of Contract A and Contract B on the ground that
Contract A from which Contract B is derived and depends has already been cancelled by the
defendant CAA and maintains that Contract C with the defendant CAA is the only valid and
subsisting contract insofar as the parcel of land, subject to the present litigation is concerned.

Defendants Leverizas claim that Contract A which is their contract with CAA has never been
legally cancelled and still valid and subsisting; that it is Contract C between plaintiff and
defendant CAA which should be declared void.

CAA asserts that Contract A is still valid and subsisting because its cancellation by Jurado was
ineffective and asks the court to annul Contract A because of the violation committed by
Leveriza in leasing the parcel of land to plaintiff by virtue of Contract B without the consent of
CAA. CAA further asserts that Contract C not having been approved by the Director of Public
Works and Communications is not valid.

After trial, the lower courts rendered judgment:

1. Declaring Contract A as having been validly cancelled on June 28, 1966, and has therefore
ceased to have any effect as of that date;

2. Declaring that Contract B has likewise ceased to have any effect as of June 28, 1966 because
of the cancellation of Contract A;

3. Declaring that Contract C was validly entered into on June 1, 1968, and that it is still valid and
subsisting;

CAA filed a Motion for Reconsideration, averring that because the lot lease was properly
registered in the name of the Republic of the Philippines, it was only the President of the
Philippines or an officer duly designated by him who could execute the lease contract pursuant to
Sec. 567 of the Revised Administrative Code; that the Airport General Manager has no authority
to cancel Contract A, the contract entered into between the CAA and Leveriza, and that Contract
C between the CAA and Mobil was void for not having been approved by the Secretary of Public
Works and Communications. Said motion was however denied.

On appeal, the IAC affirmed in toto the decision of the lower court. Hence this petition for
Review on certiorari.
ISSUE: There is no dispute that Contract A at the time of its execution was a valid contract.
The issue therefore is whether or not said contract is still subsisting after its cancellation by
CAA on the ground of a sublease executed by petitioners with Mobil Oil (CONTRACT B)
without the consent of CAA and the execution of another contract of lease between CAA and
Mobil Oil (CONTRACT C)

The issue narrows down to: WON there is a valid ground for the cancellation of Contract A

HELD: The petition is DISMISSED for lack of merit and the decision of the Court of Appeals
appealed from is AFFIRMED in toto.

YES

Contract A was entered into by CAA as the lessor and the Leverizas as the lessee specifically
for the purpose of operating and managing a gasoline station by the latter, to serve vehicles
going in and out of the airport.

As regards prior consent of the lessor to the transfer of rights to the leased premises, the
provision of paragraph 7 of said Contract reads in full:

7. The Party of the Second part may transfer her rights to the leased premises but in such
eventuality, the consent of the Party of the First Part shall first be secured. In any event, such
transfer of rights shall have to respect the terms and conditions of this agreement.

Paragraph 8 provides the sanction for the violation of the above-mentioned terms and conditions
of the contract. Said paragraph reads:

8. Failure on the part of the Party of the Second Part to comply with the terms and conditions
herein agreed upon shall be sufficient for revocation of this contract by the Party of the First
Part without need of judicial demand.

It is not disputed that the Leverizas (lessees) entered into a contract of sublease (Contract B) with
Mobil Oil without the consent of CAA (lessor). The cancellation of the contract was made in a
letter by Jurado, Airport General Manager of CAA addressed to Rosario Leveriza.

Respondent Leverizas and the CAA assailed the validity of such cancellation, claiming that the
Airport General Manager had no legal authority to make the cancellation. They maintain that it is
only the (1)Secretary of Public Works and Communications, acting for the President, or by
delegation of power, the (2)Director of CCA who could validly cancel the contract. Petitioners
argue that cancelling or setting aside a contract approved by the Secretary is, in effect, repealing
an act of the Secretary which is beyond the authority of the Administrator.

Such argument is untenable. The terms and conditions under which such revocation or
cancellation may be made, have already been specifically provided for in Contract A which
has already been approved by the Department Head, It is evident that in the implementation of
aforesaid contract, the approval of said Department Head is no longer necessary if not redundant
NOTES:

1. It is further contended that even granting that such cancellation was effective, a subsequent
billing by the Accounting Department of the CAA has in effect waived or nullified the rescission
of Contract A.

The billing of the petitioners by the Accounting Department of the CAA if indeed it transpired,
after the cancellation of Contract A is obviously an error. However, this Court has already
ruled that the mistakes of government personnel should not affect public interest.

2. Petitioners further assail the interpretation of Contract A, claiming that Contract B was a
mere sublease to Mobil Oil and requires no prior consent of CAA to perfect the same. Citing
Article 1650 of the Civil Code, they assert that the prohibition to sublease must be expressed and
cannot be merely implied or inferred.

As correctly found by the Court of Appeals, petitioners in asserting the non- necessity for a prior
consent interprets the first sentence of paragraph 7 of Contract A to refer to an assignment of
lease under Article 1649 of the Civil Code and not to a mere sublease. A careful scrutiny of said
paragraph of Contract A clearly shows that it speaks of transfer of rights of Rosario Leveriza
to the leased premises and not to assignment of the lease.

2. Petitioners likewise argued that it was contemplated by the parties to Contract A that Mobil
Oil would be the owner of the gasoline station it would construct on the leased premises during
the period of the lease, hence, it is understood that it must be given a right to use and occupy the
lot in question in the form of a sub-lease.

In Contract A, it was categorically stated that it is the lessee (petitioner) who will manage and
operate the gasoline station. The fact that Mobil Oil was mentioned in that contract was clearly
not intended to give approval to a sublease between petitioners and said company but rather to
insure that in the arrangements to be made between them, it must be understood that after the
expiration of the lease contract, whatever improvements have been constructed in the leased
premises shall be relinquished to CAA. Thus, this Court held that the primary and elementary
rule of construction of documents is that when the words or language thereof is clear and plain or
readily understandable by any ordinary reader thereof, there is absolutely no room for
interpretation or construction anymore.

3. <ADMINISTRATIVE LAW>Finally, petitioners contend that the administrator of CAA


cannot execute without approval of the Department Secretary, a valid contract of lease over real
property owned by the Republic of the Philippines, citing the Revised Administrative Code,
which provide that Under 567 of the Revised Administrative Code, such contract of lease must
be executed:
(1) by the President of the Philippines, or

(2) by an officer duly designated by him or

(3) by an officer expressly vested by law.

On the other hand, respondent CAA avers that the CAA Administrator has the authority to
lease real property belonging to the RP under its administration even without the approval of the
Secretary of Public Works and Communications, which authority is expressly vested in it by law,
more particularly Section 32 (24) of Republic Act 776, which reads:

Sec. 32. Powers and Duties of the Administrator. Subject to the general control and
supervision of the Department Head, the Administrator shall have, among others, the following
powers and duties:

xxx xxx xxx

(24) To administer, operate, manage, control, maintain and develop the Manila International
Airport and all government aerodromes except those controlled or operated by the Armed Forces
of the Philippines including such power and duties as: (b) to enter into, make and execute
contracts of any kind with any person, firm, or public or private corporation or entity; (c) to
acquire, hold, purchase, or lease any personal or real property; right of ways, and easements
which may be proper or necessary: Provided, that no real property thus acquired and any other
real property of the Civil Aeronautics Administration shall be sold without the approval of the
President of the Philippines.

There is no dispute that the Revised Administrative Code is a general law while Republic Act
776 is a special law nor in the fact that the real property subject of the lease in Contract C is
real property belonging to the Republic of the Philippines.

It is readily apparent that in the case at bar, the CAA has the authority to enter into Contracts of
Lease for the government under the third category (Art. 567. )Thus, as correctly ruled by the
Court of Appeals, the CAA has the power to execute the deed or contract involving leases of real
properties belonging to the RP, not because it is an entity duly designated by the President but
because the said authority to execute the same is, by law expressly vested in it, which in this case
is RA 776.

Under the above-cited Section 32 (par. 24) of Republic Act 776, the Administrator (Director) of
the CAA by reason of its creation and existence, administers properties belonging to the RP and
it is on these properties that the Administrator must exercise his vast power and discharge his
duty to enter into, make and execute contract of any kind with any person, firm, or public or
private corporation or entity and to acquire, hold, purchase, or lease any personal or real
property, right of ways and easements which may be proper or necessary. (The exception,
however, is the sale of properties acquired by CAA or any other real properties of the same
which must have the approval of the President of the Philippines.) The Court of appeals took
cognizance of the striking absence of such proviso in the other transactions contemplated in
paragraph (24) and is convinced as we are, that the Director of the CAA does not need the prior
approval of the President or the Secretary of Public Works and Communications in the
execution of Contract C.

In this regard, this Court, ruled that another basic principle of statutory construction mandates
that general legislation must give way to special legislation on the same subject, and generally be
so interpreted as to embrace only cases in which the special provisions are not applicable; that
specific statute prevails over a general ; and that where two statutes are of equal theoretical
application to a particular case, the one designed therefor specially should prevail.

EN BANC

[ G.R. No. 120319, October 06, 1995 ]


LUZON DEVELOPMENT BANK, PETITIONER, VS. ASSOCIATION OF LUZON DEVELOPMENT
BANK EMPLOYEES AND ATTY. ESTER S. GARCIA IN HER CAPACITY AS VOLUNTARY
ARBITRATOR, RESPONDENTS.

DECISION

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 be
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:

"x x x. (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 x x x"

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 x x x 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:

"x x x 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 x x x"

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 therefore in the Labor Code and he falls, therefore, within the
contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also provided for in the Labor Code, Circular No.
1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down the
procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.

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

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

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

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

SO ORDERED.

Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco, and Hermosisima,
Jr., JJ., concur.
Feliciano, J., in the result.
Narvasa, C.J., and Melo, J., on leave.

BALICAS vs. FFIB, OFFICE OF


THE OMBUDSMAN
March 26, 2011 ~ Leave a comment

BALICAS vs. FFIB, OFFICE OF THE OMBUDSMAN


G. R. No. 145972

March 23, 2004

FACTS: In the development of the Cherry Hills Subdivision (CHS), Philjas applied for the
issuance of ECC from the DENR-Region IV

Respondent BALICAS, PENRO senior environmental management specialist, monitored the


implementation of the CHS Project Development to check compliance with the terms and
conditions in the ECC. She conducted another monitoring on the project for the same purpose. In
both instances, she noted that the project was still in the construction stage hence, compliance
with the stipulated conditions could not be fully assessed, and therefore, a follow-up monitoring
is proper. It appeared from the records that this August 23, 1995 monitoring inspection was the
last one conducted by the DENR.

Immediately after the tragic incident on August 3, 1999, a fact-finding investigation was
conducted by the Office of the Ombudsman through its Fact-Finding and Intelligence Bureau
(FFIB), which duly filed an administrative complaint with the Office of the Ombudsman against
several officials of the Housing and Land Use Regulatory Board (HLURB), Department of
Environment and Natural Resources (DENR), and the local government of Antipolo.

The charge against petitioner involved a supposed failure on her part to monitor and inspect the
development of CHS, which was assumed to be her duty as DENR senior environmental
management specialist assigned in the province of Rizal.

For her part, petitioner belied allegations that monitoring was not conducted, claiming that she
monitored the development of CHS as evidenced by 3 monitoring reports .She further claimed
good faith and exercise of due diligence, insisting that the tragedy was a fortuitous event. She
reasoned that the collapse did not occur in Cherry Hills, but in the adjacent mountain eastern side
of the subdivision.

The Office of the Ombudsman rendered a decision imposing upon petitioner the supreme penalty
of dismissal from office for gross neglect of duty.

Petitioner seasonably filed a petition for review of the Ombudsmans decision with the CA. The
Court of Appeals dismissed the petition for lack of merit and affirmed the appealed decision. It
found that the landslide was a preventable occurrence and that petitioner was guilty of gross
negligence in failing to closely monitor Philjas compliance with the conditions of the ECC given
the known inherent instability of the ground where the subdivision was developed. The appellate
court likewise denied petitioners motion for reconsideration.

This petition for review on certiorari

ISSUE: WON Balicas is guilty of gross neglect of duty


HELD: the petition is hereby GRANTED, The CA decision affirming the Ombudsmans
dismissal of petitioner IGNACIA BALICAS from office is REVERSED and SET ASIDE, and
petitioners REINSTATEMENT to her position with back pay and without loss of seniority rights
is hereby ordered.

NO

In order to ascertain if there had been gross neglect of duty, we have to look at the lawfully
prescribed duties of petitioner. Unfortunately, DENR regulations are silent on the specific duties
of a senior environmental management specialist. Internal regulations merely speak of the
functions of the Provincial Environment and Natural Resources Office (PENRO) to which
petitioner directly reports.

Tthe monitoring duties of the PENRO mainly deal with broad environmental concerns,
particularly pollution abatement. This general monitoring duty is applicable to all types of
physical developments that may adversely impact on the environment, whether housing projects,
industrial sites, recreational facilities, or scientific undertakings.

However, a more specific monitoring duty is imposed on the HLURB as the sole regulatory body
for housing and land development.

P.D. No. 1586 prescribes the following duties on the HLURB (then Ministry of Human
Settlements) in connection with environmentally critical projects requiring an ECC:

SECTION 4. Presidential Proclamation of Environmentally Critical Areas and Projects. The


President of the Philippines may, on his own initiative or upon recommendation of the National
Environment Protection Council, by proclamation declare certain projects, undertakings or areas
in the country as environmentally critical. No person, partnership or corporation shall undertake
or operate any such declared environmentally critical project or area without first securing an
Environmental Compliance Certificate issued by the President or his duly authorized
representative. For the proper management of said critical project or area, the President may by
his proclamation reorganize such government offices, agencies, institutions, corporations or
instrumentalities including the re-alignment of government personnel, and their specific
functions and responsibilities.

For the same purpose as above, the Ministry of Human Settlements [now HLURB] shall:

(a) prepare the proper land or water use pattern for said critical project(s) or area(s);

(b) establish ambient environmental quality standards;

(c) develop a program of environmental enhancement or protective measures against


calamitous factors such as earthquake, floods, water erosion and others; and

(d) perform such other functions as may be directed by the President from time to time.
The legal duty to monitor housing projects, like the CHP, against calamities such as landslides
due to continuous rain, is clearly placed on the HLURB, not on the petitioner as PENRO
senior environmental management specialist. In fact, the law imposes no clear and direct duty
on petitioner to perform such narrowly defined monitoring function.

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IRON AND STEEL AUTHORITY vs. CA


and MARIA CRISTINA
FERTILIZER CORPORATION
March 26, 2011 ~ Leave a comment

IRON AND STEEL AUTHORITY vs. CA and MARIA CRISTINA FERTILIZER


CORPORATION

G.R. No. 102976

October 25, 1995

FACTS: Iron and Steel Authority (ISA) was created by P.D. No. 272 in order, generally, to
develop and promote the iron and steel industry in the Philippines. The list of powers and
functions of the ISA included the following: xx

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

(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 States power is
necessary to implement the construction of capacity which is needed for the attainment of the
objectives of the Authority; xx

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. Pursuant to the expansion program of the NSC, Proc. No.
2239 was issued by the President of the Philippines withdrawing from sale or settlement a large
tract of public 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 Maria Cristina
Fertilizer Corporation (MCFC), Letter of Instruction (LOI), No. 1277, was issued directing
the NSC to negotiate with the owners of MCFC, for and on behalf of the Government, for the
compensation of MCFCs 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.

Negotiations between NSC and private respondent MCFC did fail. Accordingly ISA commenced
eminent domain proceedings against MCFC in the RTC of Iligan City, praying that it be placed
in possession of the property involved upon depositing in court representing ten percent (10%) of
the declared market values of that property.

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 MCFCs fertilizer plant installation.

The case proceeded to trial. While the trial was ongoing, however, the statutory existence of
petitioner ISA expired. 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.

The trial court granted MCFCs 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.

Petitioner ISA moved for reconsideration which the trial court denied.

ISA went on appeal to the CA, which affirmed the order of dismissal of the trial court. 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.

Hence this Petition for Review.

ISSUE: WON the RP is entitled to be substituted for ISA in view of the expiration of ISAs
term.

HELD: The Decision of the CA to the extent that it affirmed the trial courts 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 RPfor petitioner ISA

YES

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.
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. 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: xx

(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

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.

We consider that the ISA is properly regarded as an agent or delegate of the RP. 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 RPrefers 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


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 RP,
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 RP.

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 GRP
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 principal or the real party in interest is thus the RP and not the NSC, 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 RP 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 ISAs statutory term did not by itself require or
justify the dismissal of the eminent domain proceedings.

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 CA had required, was to generate unwarranted delay
and create needless repetition of proceedings:

NOTES:

1. Since, as we have held above, the powers and functions of ISA have reverted to the RP upon
the termination of the statutory term of ISA, the question should be addressed whether fresh
legislative authority is necessary before the RP 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 RTC , 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: xx

(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. xx

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 SG to proceed with the suit. 17

2. 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.

3. 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 RTC 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 RTC 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

LUZON DEVELOPMENT BANK vs. ASSO.


OF LDB EMPLOYEES and GARCIA
March 26, 2011 ~ Leave a comment

LUZON DEVELOPMENT BANK vs. ASSO. OF LDB EMPLOYEES and GARCIA

G.R. No. 120319

October 6, 1995

FACTS: From a submission agreement of the 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 CBA provision and the MOA on promotion.

At a conference, the parties agreed on the submission of their respective Position Papers. Atty.
Garcia, in her capacity as Voluntary Arbitrator, received ALDBEs Position Paper ; 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.

Without LDBs Position Paper, the Voluntary Arbitrator rendered a decision disposing as
follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the CBA provision nor
the MOA 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.

ISSUE: WON a voluntary arbiters decision is appealable to the CA and not the SC

HELD: the Court resolved to REFER this case to the Court of Appeals.

YES

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 NLRC for that matter. The (d)ecision, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission 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 SC itself on a petition for certiorari, in effect equating the voluntary arbitrator
with the NLRC or the CA. 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., this Court ruled that a voluntary arbitrator by the nature of her functions
acts in a quasi-judicial capacity. Under these rulings, it follows that the voluntary arbitrator,
whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but
independent of, and apart from, the NLRC since his decisions are not appealable to the latter.

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

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of RTC s 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.

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.

An instrumentality is anything used as a means or agency. 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. 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. An individual person, like
an administrator or executor, is a judicial instrumentality in the settling of an estate, in the same
manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court, and a
trustee in bankruptcy of a defunct corporation is an instrumentality of the state.

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 CA 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 CA, 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.

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 RTC 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.

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

NOTES:

1. 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 arbitrators decision.

2. 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.

LEVERIZA et al vs. IAC, Mobil oil and CAA


March 26, 2011 ~ Leave a comment

LEVERIZA et al vs. IAC, Mobil oil and CAA

G.R. No. L-66614

January 25, 1988

FACTS: Around three contracts of lease resolve the basic issues in the instant case:

Contract A a lease contract of April 2, 1965 between the Republic of the Philippines,
represented by Civil Aeronautics Administration (CAA) and. Leveriza over a parcel of land
containing an area of 4,502 square meters, for 25 years.
Contract B a lease contract (in effect a sublease) of May 21, 1965 between Leveriza and
Mobil Oil Philippines, Inc., over the same parcel of land, but reduced to 3,000 square meters for
25 years; and

Contract C a lease contract of June 1, 1968 between defendant CAA and plaintiff Mobil Oil
over the same parcel of land, but reduced to 3,000 square meters, for 25 years.

There is no dispute among the parties that the subject matter of the three contracts of lease above
mentioned, Contract A, Contract B, and Contract C, is the same parcel of land, with the noted
difference that while in Contract A, the area leased is 4,502 square meters, in Contract B and
Contract C, the area has been reduced to 3,000 square meters.

It is important to note, for a clear understanding of the issues involved, that it appears that
defendant CAA as LESSOR, leased the same parcel of land, for durations of time that
overlapped to two lessees, to wit: (1) Leveriza and Mobil Oil, and the latter, as LESSEE, leased
the same parcel of land from two lessors, to wit: (1) Leveriza and (2) CAA for durations of time
that also overlapped.

Leveriza, the lessee in Contract A and the lessor in Contract B, is now deceased. This is the
reason why her successor-in-interest, her heirs, are sued. For purposes of brevity, these
defendants shall be referred to hereinafter as Defendants Leveriza.

Mobil Oil seeks the rescission or cancellation of Contract A and Contract B on the ground that
Contract A from which Contract B is derived and depends has already been cancelled by the
defendant CAA and maintains that Contract C with the defendant CAA is the only valid and
subsisting contract insofar as the parcel of land, subject to the present litigation is concerned.

Defendants Leverizas claim that Contract A which is their contract with CAA has never been
legally cancelled and still valid and subsisting; that it is Contract C between plaintiff and
defendant CAA which should be declared void.

CAA asserts that Contract A is still valid and subsisting because its cancellation by Jurado was
ineffective and asks the court to annul Contract A because of the violation committed by
Leveriza in leasing the parcel of land to plaintiff by virtue of Contract B without the consent of
CAA. CAA further asserts that Contract C not having been approved by the Director of Public
Works and Communications is not valid.

After trial, the lower courts rendered judgment:

1. Declaring Contract A as having been validly cancelled on June 28, 1966, and has therefore
ceased to have any effect as of that date;

2. Declaring that Contract B has likewise ceased to have any effect as of June 28, 1966 because
of the cancellation of Contract A;
3. Declaring that Contract C was validly entered into on June 1, 1968, and that it is still valid and
subsisting;

CAA filed a Motion for Reconsideration, averring that because the lot lease was properly
registered in the name of the Republic of the Philippines, it was only the President of the
Philippines or an officer duly designated by him who could execute the lease contract pursuant to
Sec. 567 of the Revised Administrative Code; that the Airport General Manager has no authority
to cancel Contract A, the contract entered into between the CAA and Leveriza, and that Contract
C between the CAA and Mobil was void for not having been approved by the Secretary of Public
Works and Communications. Said motion was however denied.

On appeal, the IAC affirmed in toto the decision of the lower court. Hence this petition for
Review on certiorari.

ISSUE: There is no dispute that Contract A at the time of its execution was a valid contract.
The issue therefore is whether or not said contract is still subsisting after its cancellation by
CAA on the ground of a sublease executed by petitioners with Mobil Oil (CONTRACT B)
without the consent of CAA and the execution of another contract of lease between CAA and
Mobil Oil (CONTRACT C)

The issue narrows down to: WON there is a valid ground for the cancellation of Contract A

HELD: The petition is DISMISSED for lack of merit and the decision of the Court of Appeals
appealed from is AFFIRMED in toto.

YES

Contract A was entered into by CAA as the lessor and the Leverizas as the lessee specifically
for the purpose of operating and managing a gasoline station by the latter, to serve vehicles
going in and out of the airport.

As regards prior consent of the lessor to the transfer of rights to the leased premises, the
provision of paragraph 7 of said Contract reads in full:

7. The Party of the Second part may transfer her rights to the leased premises but in such
eventuality, the consent of the Party of the First Part shall first be secured. In any event, such
transfer of rights shall have to respect the terms and conditions of this agreement.

Paragraph 8 provides the sanction for the violation of the above-mentioned terms and conditions
of the contract. Said paragraph reads:

8. Failure on the part of the Party of the Second Part to comply with the terms and conditions
herein agreed upon shall be sufficient for revocation of this contract by the Party of the First
Part without need of judicial demand.
It is not disputed that the Leverizas (lessees) entered into a contract of sublease (Contract B) with
Mobil Oil without the consent of CAA (lessor). The cancellation of the contract was made in a
letter by Jurado, Airport General Manager of CAA addressed to Rosario Leveriza.

Respondent Leverizas and the CAA assailed the validity of such cancellation, claiming that the
Airport General Manager had no legal authority to make the cancellation. They maintain that it is
only the (1)Secretary of Public Works and Communications, acting for the President, or by
delegation of power, the (2)Director of CCA who could validly cancel the contract. Petitioners
argue that cancelling or setting aside a contract approved by the Secretary is, in effect, repealing
an act of the Secretary which is beyond the authority of the Administrator.

Such argument is untenable. The terms and conditions under which such revocation or
cancellation may be made, have already been specifically provided for in Contract A which
has already been approved by the Department Head, It is evident that in the implementation of
aforesaid contract, the approval of said Department Head is no longer necessary if not redundant

NOTES:

1. It is further contended that even granting that such cancellation was effective, a subsequent
billing by the Accounting Department of the CAA has in effect waived or nullified the rescission
of Contract A.

The billing of the petitioners by the Accounting Department of the CAA if indeed it transpired,
after the cancellation of Contract A is obviously an error. However, this Court has already
ruled that the mistakes of government personnel should not affect public interest.

2. Petitioners further assail the interpretation of Contract A, claiming that Contract B was a
mere sublease to Mobil Oil and requires no prior consent of CAA to perfect the same. Citing
Article 1650 of the Civil Code, they assert that the prohibition to sublease must be expressed and
cannot be merely implied or inferred.

As correctly found by the Court of Appeals, petitioners in asserting the non- necessity for a prior
consent interprets the first sentence of paragraph 7 of Contract A to refer to an assignment of
lease under Article 1649 of the Civil Code and not to a mere sublease. A careful scrutiny of said
paragraph of Contract A clearly shows that it speaks of transfer of rights of Rosario Leveriza
to the leased premises and not to assignment of the lease.

2. Petitioners likewise argued that it was contemplated by the parties to Contract A that Mobil
Oil would be the owner of the gasoline station it would construct on the leased premises during
the period of the lease, hence, it is understood that it must be given a right to use and occupy the
lot in question in the form of a sub-lease.

In Contract A, it was categorically stated that it is the lessee (petitioner) who will manage and
operate the gasoline station. The fact that Mobil Oil was mentioned in that contract was clearly
not intended to give approval to a sublease between petitioners and said company but rather to
insure that in the arrangements to be made between them, it must be understood that after the
expiration of the lease contract, whatever improvements have been constructed in the leased
premises shall be relinquished to CAA. Thus, this Court held that the primary and elementary
rule of construction of documents is that when the words or language thereof is clear and plain or
readily understandable by any ordinary reader thereof, there is absolutely no room for
interpretation or construction anymore.

3. <ADMINISTRATIVE LAW>Finally, petitioners contend that the administrator of CAA


cannot execute without approval of the Department Secretary, a valid contract of lease over real
property owned by the Republic of the Philippines, citing the Revised Administrative Code,
which provide that Under 567 of the Revised Administrative Code, such contract of lease must
be executed:

(1) by the President of the Philippines, or

(2) by an officer duly designated by him or

(3) by an officer expressly vested by law.

On the other hand, respondent CAA avers that the CAA Administrator has the authority to
lease real property belonging to the RP under its administration even without the approval of the
Secretary of Public Works and Communications, which authority is expressly vested in it by law,
more particularly Section 32 (24) of Republic Act 776, which reads:

Sec. 32. Powers and Duties of the Administrator. Subject to the general control and
supervision of the Department Head, the Administrator shall have, among others, the following
powers and duties:

xxx xxx xxx

(24) To administer, operate, manage, control, maintain and develop the Manila International
Airport and all government aerodromes except those controlled or operated by the Armed Forces
of the Philippines including such power and duties as: (b) to enter into, make and execute
contracts of any kind with any person, firm, or public or private corporation or entity; (c) to
acquire, hold, purchase, or lease any personal or real property; right of ways, and easements
which may be proper or necessary: Provided, that no real property thus acquired and any other
real property of the Civil Aeronautics Administration shall be sold without the approval of the
President of the Philippines.

There is no dispute that the Revised Administrative Code is a general law while Republic Act
776 is a special law nor in the fact that the real property subject of the lease in Contract C is
real property belonging to the Republic of the Philippines.
It is readily apparent that in the case at bar, the CAA has the authority to enter into Contracts of
Lease for the government under the third category (Art. 567. )Thus, as correctly ruled by the
Court of Appeals, the CAA has the power to execute the deed or contract involving leases of real
properties belonging to the RP, not because it is an entity duly designated by the President but
because the said authority to execute the same is, by law expressly vested in it, which in this case
is RA 776.

Under the above-cited Section 32 (par. 24) of Republic Act 776, the Administrator (Director) of
the CAA by reason of its creation and existence, administers properties belonging to the RP and
it is on these properties that the Administrator must exercise his vast power and discharge his
duty to enter into, make and execute contract of any kind with any person, firm, or public or
private corporation or entity and to acquire, hold, purchase, or lease any personal or real
property, right of ways and easements which may be proper or necessary. (The exception,
however, is the sale of properties acquired by CAA or any other real properties of the same
which must have the approval of the President of the Philippines.) The Court of appeals took
cognizance of the striking absence of such proviso in the other transactions contemplated in
paragraph (24) and is convinced as we are, that the Director of the CAA does not need the prior
approval of the President or the Secretary of Public Works and Communications in the
execution of Contract C.

In this regard, this Court, ruled that another basic principle of statutory construction mandates
that general legislation must give way to special legislation on the same subject, and generally be
so interpreted as to embrace only cases in which the special provisions are not applicable; that
specific statute prevails over a general ; and that where two statutes are of equal theoretical
application to a particular case, the one designed therefor specially should prevail.

MECANO vs.COA
March 26, 2011 ~ Leave a comment

MECANO vs.COA

G.R. No. 103982

December 11, 1992

FACTS: Mecano is a Director II of the NBI. He was hospitalized and on account of which he
incurred medical and hospitalization expenses, the total amount of which he is claiming from the
COA.

In a memorandum to the NBI Director, Director Lim requested reimbursement for his expenses
on the ground that he is entitled to the benefits under Section 699 of the RAC, the pertinent
provisions of which read:
Sec. 699. Allowances in case of injury, death, or sickness incurred in performance of duty.
When a person in the service of the national government of a province, city, municipality or
municipal district is so injured in the performance of duty as thereby to receive some actual
physical hurt or wound, the proper Head of Department may direct that absence during any
period of disability thereby occasioned shall be on full pay, though not more than six months,
and in such case he may in his discretion also authorize the payment of the medical attendance,
necessary transportation, subsistence and hospital fees of the injured person. Absence in the case
contemplated shall be charged first against vacation leave, if any there be.

xxx xxx xxx

In case of sickness caused by or connected directly with the performance of some act in the line
of duty, the Department head may in his discretion authorize the payment of the necessary
hospital fees.

Director Lim then forwarded petitioners claim, to the Secretary of Justice. Finding petitioners
illness to be service-connected, the Committee on Physical Examination of the Department of
Justice favorably recommended the payment of petitioners claim.

However, then Undersecretary of Justice Bello III returned petitioners claim to Director Lim,
having considered the statements of the Chairman of the COA to the effect that the RAC
being relied upon was repealed by the Administrative Code of 1987.

Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 1991 of
then Secretary of Justice Drilon stating that the issuance of the Administrative Code did not
operate to repeal or abregate in its entirety the Revised Administrative Code, including the
particular Section 699 of the latter.

Director Lim transmitted anew Mecanos claim to then Undersecretary Bello for favorable
consideration; Secretary Drilon forwarded petitioners claim to the COA Chairman,
recommending payment of the same. COA Chairman however, denied petitioners claim on the
ground that Section 699 of the RAC had been repealed by the Administrative Code of 1987,
solely for the reason that the same section was not restated nor re-enacted in the
Administrative Code of 1987. He commented, however, that the claim may be filed with the
Employees Compensation Commission, considering that the illness of Director Mecano
occurred after the effectivity of the Administrative Code of 1987.

Eventually, petitioners claim was returned by Undersecretary of Justice Montenegro to Director


Lim with the advice that petitioner elevate the matter to the Supreme Court if he so desires.

Hence this petition for certiorari.

ISSUE: 1. WON the Administrative Code of 1987 repealed or abrogated Section 699 of the
RAC
HELD: The Court resolves to GRANT the petition; respondent is hereby ordered to give due
course to petitioners claim for benefits

NO

The question of whether a particular law has been repealed or not by a subsequent law is a matter
of legislative intent. The lawmakers may expressly repeal a law by incorporating therein a
repealing provision which expressly and specifically cites the particular law or laws, and portions
thereof, that are intended to be repealed. A declaration in a statute, usually in its repealing clause,
that a particular and specific law, identified by its number or title, is repealed is an express
repeal; all others are implied repeals

In the case of the two Administrative Codes in question, the ascertainment of whether or not it
was the intent of the legislature to supplant the old Code with the new Code partly depends on
the scrutiny of the repealing clause of the new Code. This provision is found in Section 27, Book
VII (Final Provisions) of the Administrative Code of 1987 which reads:

Sec. 27. Repealing Clause. All laws, decrees, orders, rules and regulations, or portions
thereof, inconsistent with this Code are hereby repealed or modified accordingly.

The question that should be asked is: What is the nature of this repealing clause?

It is certainly not an express repealing clause because it fails to identify or designate the act or
acts that are intended to be repealed. Rather, it is an example of a general repealing
provision. It is a clause which predicates the intended repeal under the condition that substantial
conflict must be found in existing and prior acts. This latter situation falls under the category of
an implied repeal.

There are two categories of repeal by implication.

1. Where provisions in the two acts on the same subject matter are in an irreconcilable
conflict, the later act to the extent of the conflict constitutes an implied repeal of the
earlier one.
2. 2. If the later act covers the whole subject of the earlier one and is clearly intended as a
substitute, it will operate to repeal the earlier law.

Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover
the entire subject matter of the old Code. There are several matters treated in the old Code which
are not found in the new Code, such as the provisions on notaries public, the leave law, the
public bonding law, military reservations, claims for sickness benefits under Section 699, and
still others.

According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent
to cover only those aspects of government that pertain to administration, organization and
procedure, understandably because of the many changes that transpired in the government
structure since the enactment of the RAC decades of years ago.
Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of
the subject claim are in an irreconcilable conflict. In fact, there can be no such conflict because
the provision on sickness benefits of the nature being claimed by petitioner has not been restated
in the Administrative Code of 1987.

Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication are
not favored. 20 The presumption is against inconsistency and repugnancy for the legislature is
presumed to know the existing laws on the subject and not to have enacted inconsistent or
conflicting statutes.

NOTES:

1. the COA would have Us consider that the fact that Section 699 was not restated in the
Administrative Code of 1987 meant that the same section had been repealed. The COA anchored
this argument on the whereas clause of the 1987 Code, which states:

WHEREAS, the effectiveness of the Government will be enhanced by a new Administrative


Code which incorporate in a unified document the major structural, functional and procedural
principles and rules of governance; and

xxx xxx xxx

It argues, in effect, that what is contemplated is only one Code the Administrative Code of
1987. This contention is untenable.

The fact that a later enactment may relate to the same subject matter as that of an earlier statute is
not of itself sufficient to cause an implied repeal of the prior act, since the new statute may
merely be cumulative or a continuation of the old one. What is necessary is a manifest
indication of legislative purpose to repeal.

2. Regarding COA contention that recovery under this subject section (699) shall bar the
recovery of benefits under the Employees Compensation Program, the same cannot be upheld.
The second sentence of Article 173, Chapter II, Title II (dealing on Employees Compensation
and State Insurance Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly
provides that the payment of compensation under this Title shall not bar the recovery of benefits
as provided for in Section 699 of the Revised Administrative Code . . . whose benefits are
administered by the system (meaning SSS or GSIS) or by other agencies of the government.

EUGENIO vs. CSC et al


March 26, 2011 ~ Leave a comment

EUGENIO vs. CSC et al

G.R. No. 115863


March 31, 1995

FACTS: . Eugenio is the Deputy Director of the Philippine Nuclear Research Institute. She
applied for a Career Executive Service (CES) Eligibility and a CESO rank,. She was given a
CES eligibility and was recommended to the President for a CESO rank by the Career Executive
Service Board.

Then respondent Civil Service Commission passed a Resolution which abolished the CESB,
relying on the provisions of Section 17, Title I, Subtitle A. Book V of the Administrative Code of
1987 allegedly conferring on the Commission the power and authority to effect changes in its
organization as the need arises. Said resolution states:

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.

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, said resolution.

ISSUE: WON CSC given the authority to abolish the office of the CESB

HELD: the petition is granted and Resolution of the respondent Commission is hereby annulled
and set aside

NO

1. The controlling fact is that the CESB was created in PD No. 1 on September 1, 1974. 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

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.

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.

As read together, the inescapable conclusion is that respondent Commissions power to


reorganize is limited to offices under its control as enumerated in Section 16..
2. . 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.

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.

NOTES:

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.

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

(1) The Office of the Executive

(2) The Merit System Protection Board composed of a Chairman and two (2) members

(3) The Office of Legal Affairs

(4) The Office of Planning and Management

(5) The Central Administrative Office.

(6) The Office of Central Personnel Records

(7) The Office of Position Classification and Compensation


(8) The Office of Recruitment, Examination and Placement

(9) The Office of Career Systems and Standards

(10) The Office of Human Resource Development

(11) The Office of Personnel Inspection and Audit.

(12) The Office of Personnel Relations

(13) The Office of Corporate Affairs

(14) The Office of Retirement

(15) The Regional and Field Offices.

CHREA vs.CHR
March 26, 2011 ~ Leave a comment

CHREA vs.CHR

G.R. No. 155336

November 25, 2004

FACTS: Congress passed RA 8522, otherwise known as the General Appropriations Act of
1998. It provided for Special Provisions Applicable to All Constitutional Offices Enjoying Fiscal
Autonomy. On the strength of these special provisions, the CHR promulgated Resolution No.
A98-047 adopting an upgrading and reclassification scheme among selected positions in the
Commission.

By virtue of Resolution No. A98-062, the CHR collapsed the vacant positions in the body to
provide additional source of funding for said staffing modification.

The CHR forwarded said staffing modification and upgrading scheme to the DBM with a request
for its approval, but the then DBM secretary denied the request.

In light of the DBMs disapproval of the proposed personnel modification scheme, the CSC-
National Capital Region Office, through a memorandum, recommended to the CSC-Central
Office that the subject appointments be rejected owing to the DBMs disapproval of the plantilla
reclassification.
Meanwhile, the officers of petitioner CHR-employees association (CHREA) in representation of
the rank and file employees of the CHR, requested the CSC-Central Office to affirm the
recommendation of the CSC-Regional Office.

The CSC-Central Office denied CHREAs request in a Resolution and reversed the
recommendation of the CSC-Regional Office that the upgrading scheme be censured. CHREA
filed a motion for reconsideration, but the CSC-Central Office denied the same.

CHREA elevated the matter to the CA, which affirmed the pronouncement of the CSC-Central
Office and upheld the validity of the upgrading, retitling, and reclassification scheme in the CHR
on the justification that such action is within the ambit of CHRs fiscal autonomy.

ISSUE: Can the CHR validly implement an upgrading, reclassification, creation, and collapsing
of plantilla positions in the Commission without the prior approval of the Department of Budget
and Management?

HELD: the petition is GRANTED, the Decision of the CA and its are hereby REVERSED and
SET ASIDE. The ruling CSC-National Capital Region is REINSTATED. The 3 CHR
Resolutions, without the approval of the DBM are disallowed.

1. RA 6758, An Act Prescribing a Revised Compensation and Position Classification System in


the Government and For Other Purposes, or the Salary Standardization Law, provides that it is
the DBM that shall establish and administer a unified Compensation and Position Classification
System.

The disputation of the CA that the CHR is exempt from the long arm of the Salary
Standardization Law is flawed considering that the coverage thereof encompasses the entire
gamut of government offices, sans qualification.

This power to administer is not purely ministerial in character as erroneously held by the CA.
The word to administer means to control or regulate in behalf of others; to direct or superintend
the execution, application or conduct of; and to manage or conduct public affairs, as to
administer the government of the state.

2. The regulatory power of the DBM on matters of compensation is encrypted not only in law,
but in jurisprudence as well. In the recent case of PRA v. Buag, this Court ruled that
compensation, allowances, and other benefits received by PRA officials and employees without
the requisite approval or authority of the DBM are unauthorized and irregular

In Victorina Cruz v. CA , we held that the DBM has the sole power and discretion to administer
the compensation and position classification system of the national government.

In Intia, Jr. v. COA the Court held that although the charter of the PPC grants it the power to fix
the compensation and benefits of its employees and exempts PPC from the coverage of the rules
and regulations of the Compensation and Position Classification Office, by virtue of Section 6 of
P.D. No. 1597, the compensation system established by the PPC is, nonetheless, subject to the
review of the DBM.

(It should be emphasized that the review by the DBM of any PPC resolution affecting the
compensation structure of its personnel should not be interpreted to mean that the DBM can
dictate upon the PPC Board of Directors and deprive the latter of its discretion on the matter.
Rather, the DBMs function is merely to ensure that the action taken by the Board of Directors
complies with the requirements of the law, specifically, that PPCs compensation system
conforms as closely as possible with that provided for under R.A. No. 6758. )

3. As measured by the foregoing legal and jurisprudential yardsticks, the imprimatur of the DBM
must first be sought prior to implementation of any reclassification or upgrading of positions in
government. This is consonant to the mandate of the DBM under the RAC of 1987, Section 3,
Chapter 1, Title XVII, to wit:

SEC. 3. Powers and Functions. The Department of Budget and Management shall assist the
President in the preparation of a national resources and expenditures budget, preparation,
execution and control of the National Budget, preparation and maintenance of accounting
systems essential to the budgetary process, achievement of more economy and efficiency in the
management of government operations, administration of compensation and position
classification systems, assessment of organizational effectiveness and review and evaluation of
legislative proposals having budgetary or organizational implications.

Irrefragably, it is within the turf of the DBM Secretary to disallow the upgrading,
reclassification, and creation of additional plantilla positions in the CHR based on its finding that
such scheme lacks legal justification.

Notably, the CHR itself recognizes the authority of the DBM to deny or approve the proposed
reclassification of positions as evidenced by its three letters to the DBM requesting approval
thereof. As such, it is now estopped from now claiming that the nod of approval it has previously
sought from the DBM is a superfluity

4. The CA incorrectly relied on the pronouncement of the CSC-Central Office that the CHR is a
constitutional commission, and as such enjoys fiscal autonomy.

Palpably, the CAs Decision was based on the mistaken premise that the CHR belongs to the
species of constitutional commissions. But the Constitution states in no uncertain terms that only
the CSC, the COMELEC, and the COA shall be tagged as Constitutional Commissions with the
appurtenant right to fiscal autonomy.

Along the same vein, the Administrative Code, on Distribution of Powers of Government, the
constitutional commissions shall include only the CSC, the COMELEC, and the COA, which are
granted independence and fiscal autonomy. In contrast, Chapter 5, Section 29 thereof, is silent on
the grant of similar powers to the other bodies including the CHR. Thus:
SEC. 24. Constitutional Commissions. The Constitutional Commissions, which shall be
independent, are the Civil Service Commission, the Commission on Elections, and the
Commission on Audit.

SEC. 26. Fiscal Autonomy. The Constitutional Commissions shall enjoy fiscal autonomy. The
approved annual appropriations shall be automatically and regularly released.

SEC. 29. Other Bodies. There shall be in accordance with the Constitution, an Office of the
Ombudsman, a Commission on Human Rights, and independent central monetary authority, and
a national police commission. Likewise, as provided in the Constitution, Congress may establish
an independent economic and planning agency.

From the 1987 Constitution and the Administrative Code, it is abundantly clear that the CHR is
not among the class of Constitutional Commissions. As expressed in the oft-repeated maxim
expressio unius est exclusio alterius, the express mention of one person, thing, act or
consequence excludes all others. Stated otherwise, expressium facit cessare tacitum what is
expressed puts an end to what is implied.

Nor is there any legal basis to support the contention that the CHR enjoys fiscal autonomy. In
essence, fiscal autonomy entails freedom from outside control and limitations, other than those
provided by law. It is the freedom to allocate and utilize funds granted by law, in accordance
with law, and pursuant to the wisdom and dispatch its needs may require from time to time.22 In
Blaquera v. Alcala and Bengzon v. Drilon,23 it is understood that it is only the Judiciary, the
CSC, the COA, the COMELEC, and the Office of the Ombudsman, which enjoy fiscal
autonomy.

Neither does the fact that the CHR was admitted as a member by the Constitutional Fiscal
Autonomy Group (CFAG) ipso facto clothed it with fiscal autonomy. Fiscal autonomy is a
constitutional grant, not a tag obtainable by membership.

We note with interest that the special provision under Rep. Act No. 8522, while cited under the
heading of the CHR, did not specifically mention CHR as among those offices to which the
special provision to formulate and implement organizational structures apply, but merely states
its coverage to include Constitutional Commissions and Offices enjoying fiscal autonomy

All told, the CHR, although admittedly a constitutional creation is, nonetheless, not included in
the genus of offices accorded fiscal autonomy by constitutional or legislative fiat.

Even assuming en arguendo that the CHR enjoys fiscal autonomy, we share the stance of the
DBM that the grant of fiscal autonomy notwithstanding, all government offices must, all the
same, kowtow to the Salary Standardization Law. We are of the same mind with the DBM on its
standpoint, thus-

Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of
the Group are authorized to formulate and implement the organizational structures of their
respective offices and determine the compensation of their personnel, such authority is not
absolute and must be exercised within the parameters of the Unified Position Classification and
Compensation System established under RA 6758 more popularly known as the Compensation
Standardization Law.

5. The most lucid argument against the stand of respondent, however, is the provision of Rep.
Act No. 8522 that the implementation hereof shall be in accordance with salary rates,
allowances and other benefits authorized under compensation standardization laws.26

NOTES:

1. Respondent CHR sharply retorts that petitioner has no locus standi considering that there
exists no official written record in the Commission recognizing petitioner as a bona fide
organization of its employees nor is there anything in the records to show that its president has
the authority to sue the CHR.

On petitioners personality to bring this suit, we held in a multitude of cases that a proper party is
one who has sustained or is in immediate danger of sustaining an injury as a result of the act
complained of. Here, petitioner, which consists of rank and file employees of respondent CHR,
protests that the upgrading and collapsing of positions benefited only a select few in the upper
level positions in the Commission resulting to the demoralization of the rank and file employees.
This sufficiently meets the injury test. Indeed, the CHRs upgrading scheme, if found to be valid,
potentially entails eating up the Commissions savings or that portion of its budgetary pie
otherwise allocated for Personnel Services, from which the benefits of the employees, including
those in the rank and file, are derived.

Further, the personality of petitioner to file this case was recognized by the CSC when it took
cognizance of the CHREAs request to affirm the recommendation of the CSC-National Capital
Region Office. CHREAs personality to bring the suit was a non-issue in the CA when it passed
upon the merits of this case. Thus, neither should our hands be tied by this technical concern.
Indeed, it is settled jurisprudence that an issue that was neither raised in the complaint nor in the
court below cannot be raised for the first time on appeal, as to do so would be offensive to the
basic rules of fair play, justice, and due process.

2. In line with its role to breathe life into the policy behind the Salary Standardization Law of
providing equal pay for substantially equal work and to base differences in pay upon
substantive differences in duties and responsibilities, and qualification requirements of the
positions, the DBM, in the case under review, made a determination, after a thorough
evaluation, that the reclassification and upgrading scheme proposed by the CHR lacks legal
rationalization.

The DBM expounded that Section 78 of the general provisions of the General Appropriations
Act FY 1998, which the CHR heavily relies upon to justify its reclassification scheme, explicitly
provides that no organizational unit or changes in key positions shall be authorized unless
provided by law or directed by the President. Here, the DBM discerned that there is no law
authorizing the creation of a Finance Management Office and a Public Affairs Office in the
CHR. Anent CHRs proposal to upgrade twelve positions of Attorney VI, SG-26 to Director IV,
SG-28, and four positions of Director III, SG-27 to Director IV, SG-28, in the Central Office, the
DBM denied the same as this would change the context from support to substantive without
actual change in functions.

This view of the DBM, as the laws designated body to implement and administer a unified
compensation system, is beyond cavil. The interpretation of an administrative government
agency, which is tasked to implement a statute is accorded great respect and ordinarily controls
the construction of the courts. In Energy Regulatory Board v. CA, we echoed the basic rule that
the courts will not interfere in matters which are addressed to the sound discretion of government
agencies entrusted with the regulation of activities coming under the special technical knowledge
and training of such agencies.

Search for:
Malaga vs. Penachos (Digest)
Ma. Elena Malaga, et. al. vs. Manuel R. Penachos, Jr., et.al.

GR No. 86995 03 September 1992

Chartered Institution and GOCC, defined.

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

Petitioners Malaga and Najarro, doing business under the name of BE Construction and Best
Built Construction, respectively, submitted their pre-qualification documents at two o'clock in the
afternoon of December 2, 1988. Petitioner Occeana submitted his own PRE-C1 on December
5, 1988. All three of them were not allowed to participate in the bidding as their documents
were considered late.

On December 12, 1988, the petitioners filed a complaint with the Iloilo RTC against the officers
of PBAC for their refusal without just cause to accept them resulting to their non-inclusion in the
list of pre-qualified bidders. They sought to the resetting of the December 12, 1988 bidding and
the acceptance of their 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 Lebaquin issued a restraining order prohibiting PBAC from conducting
the bidding and award the project. The defendants filed a motion to lift the restraining order on
the ground that the court is prohibited from issuing such order, preliminary injunction and
preliminary mandatory injunction in government infrastructure project under Sec. 1 of P.D.
1818. They also contended that the preliminary injunction had become moot and academic as it
was served after the bidding had been awarded and closed.
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 constructed at the ISCOF was
an infrastructure project of the government falling within the coverage of the subject law.

ISSUE: Whether or not ISCOF is a government instrumentality subject to the provisions of PD


1818?

RULING: 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).

The same 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.

Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition in the
said decree as there are irregularities present surrounding the transaction that justified the
injunction issued as regards to the bidding and the award of the project (citing the case of
Datiles vs. Sucaldito).

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