EPA
The said Order of
Part 2 Cases
1) United Residents of Dominican Hills Inc. v.
Commission on the Settlement of Land Problems
TOPIC: AN EXECUTIVE AGENCY IS NOT A COURT.
FACTS: Dominican Hills, formerly registered as Diplomat
Hills in Baguio City, was mortgaged to the United Coconut
Planters Bank (UCPB). It was eventually foreclosed and
acquired later on by the said bank as the highest bidder.
On 11 April 1983, through its President Eduardo Cojuangco
Jr., the subject property was donated to the Republic of the
Philippines. The deed of donation stipulated that
Dominican Hills would be utilized for the "priority programs,
projects, activities in human settlements and economic
development and governmental purposes" of the Ministry of
Human Settlements.
On December 12, 1986, then President Corazon Aquino
issued EO 85 abolishing the Ministry of Human
Settlements. All agencies under the its supervision as well
as all its assets, programs and projects, were transferred to
the Presidential Management Staff (PMS).
On 18 October 1988, United (Dominican Hills) submitted its
application before the PMS to acquire a portion of the
Dominican Hills property. In a MOA, PMS and United
agreed that the latter may purchase a portion of the said
property from HOME INSURANCE GUARANTY
CORPORATIO, acting as originator, on a selling price of
P75.00 per square meter.
Thus, on June 12, 1991, HIGC sold 2.48 hectares of the
property to UNITED. The deed of conditional sale provided
that ten (10) per cent of the purchase price would be paid
upon signing, with the balance to be amortized within one
year from its date of execution. After UNITED made its final
payment on January 31, 1992, HIGC executed a Deed of
Absolute Sale dated July 1, 1992.
Petitioner alleges that sometime in 1993, private
respondents entered the Dominican Hills property allocated
to UNITED and constructed houses thereon. Petitioner was
able to secure a demolition order from the city mayor.
Unable to stop the razing of their houses, private
respondents, under the name DOMINICAN HILL BAGUIO
RESIDENTS HOMELESS ASSOCIATION (ASSOCIATION,
for brevity) filed an action for injunction before RTC Baguio
City. Private respondents were able to obtain a temporary
restraining order but their prayer for a writ of preliminary
injunction was later denied.
The ASSOCIATION filed a separate civil case for damages,
injunction and annulment of the said MOA. It was later on
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dismissed upon motion of United.
dismissal is currently on appeal with the Court of Appeals.
The demolition order was subsequently implemented by the
Office of the City Mayor and the City Engineer's Office of
Baguio City. However, petitioner avers that private
respondents returned and reconstructed the demolished
structures.
To forestall the re-implementation of the demolition order,
private respondents filed a petition for annulment of
contracts with prayer for a temporary restraining order
before the Commission on the Settlement of Land Problems
(COSLAP) against petitioner, HIGC, PMS, the City
Engineer's Office, the City Mayor, as well as the Register of
Deeds of Baguio City. On the very same day, public
respondent COSLAP issued the contested order requiring
the parties to maintain the status quo. Without filing a
motion for reconsideration from the aforesaid status quo
order, petitioner filed the instant petition questioning the
jurisdiction of the COSLAP.
ISSUE: W/O COSLAP is empowered to hear and try a
petition for annulment of contracts with prayer for a TRO
and to issue a status quo order and conduct a hearing
thereof?
RULING: COSLAP is not justified in assuming jurisdiction
over the controversy. It discharges quasi-judicial functions:
"Quasi-judicial function" is a term which applies to the
actions, discretion, etc. of public administrative officers or
bodies, who are required to investigate facts, or ascertain
the existence of facts, hold hearings, and draw conclusions
from them, as a basis for their official action and to exercise
discretion of a judicial nature."
However, it does not depart from its basic nature as an
administrative agency, albeit one that exercises quasi-
judicial functions. Still, administrative agencies are not
considered courts; they are neither part of the judicial
system nor are they deemed judicial tribunals. The doctrine
of separation of powers observed in our system of
government reposes the three (3) great powers into its
three (3) branches — the legislative, the executive, and the
judiciary — each department being co-equal and
coordinate, and supreme in its own sphere. Accordingly, the
executive department may not, by its own fiat, impose the
judgment of one of its own agencies, upon the judiciary.
Indeed, under the expanded jurisdiction of the Supreme
Court, it is empowered "to determine whether or not there
has been grave abuse of discretion amounting to lack of or
excess of jurisdiction on the part of any branch or
instrumentality of the Government."
2) Rural Bank of Davao Inc. v. Onahon
3) Leyson v. Office of the Ombudsman
The Coconut Industry Investment Fund (CIIF) companies
failed to comply with its contract agreement with the
International Towage and Transport Corporation (ITTC) for
the transport of coconut oil in bulk. ITTC Executive Vice
President Manuel Leyson, Jr. filed a complaint with the
Office of the Ombudsman for breach of contract, among
others. The complaint was dismissed.
ISSUE(S): Whether or not the Office of the Ombudsman
has jurisdiction to further act on the complaint.
HELD: NO. All three corporations comprising the CIIF
companies were organized as stock corporations. The
UCPB-CIIF owns 44.10% of the shares of Legaspi Oil,
91.24% of the shares of GranExport, and 92.85% of the
shares of United Coconut. Obviously, the below 51%
shares of stock in Legaspi Oil removes it from the definition
of a government-owned or controlled corporation. There is
no showing that GranExport and United Coconut was
vested with functions relating to publi cneeds whether
governmental or proprietary in nature. Thus, the CIIF
companies are private corporations not within the scope of
the Ombudsman’s jurisdiction.
4) Malaga v. Penachos
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.
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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).
5) Blaquera v. Alcala
Facts: On Feb. 21, 1992, then Pres. Aquino issued AO 268
which granted each official and employee of the
government the productivity incentive benefits in a
maximum amount equivalent to 30% of the employee’s one
month basic salary but which amount not be less than P2,
000.00. Said AO provided that the productivity incentive
benefits shall be granted only for the year 1991.
Accordingly, all heads of agencies, including government
boards of government-owned or controlled corporations and
financial institutions, are strictly prohibited from granting
productivity incentive benefits for the year 1992 and future
years pending the result of a comprehensive study being
undertaken by the Office of the Pres.
The petitioners, who are officials and employees of several
government departments and agencies, were paid incentive
benefits for the year 1992. Then, on Jan. 19, 1993, then
Pres. Ramos issued AO 29 authorizing the grant of
productivity incentive benefits for the year 1992 in the
maximum amount of P1,000.00 and reiterating the
prohibition under Sec. 7 of AO 268, enjoining the grant of
productivity incentive benefits without prior approval of the
President. Sec. 4 of AO 29 directed all departments, offices
and agencies which authorized payment of productivity
incentive bonus for the year 1992 in excess of P1, 000.00
to immediately cause the refund of the excess. In
compliance therewith, the heads of the departments or
agencies of the government concerned caused the
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deduction from petitioners’ salaries or allowances of the
amounts needed to cover the alleged overpayments.
Issue: Whether or not AO 29 and AO 268 were issued in
the valid exercise of presidential control over the executive
departments
Held: The Pres. is the head of the government.
Governmental power and authority are exercised and
implemented through him. His power includes the control of
executive departments as provided under Sec. 17, Art. VII
of the Constitution.
Control means the power of an officer to alter or modify or
set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of
the former for that of the latter. The Pres. can, by virtue of
his power of control, review, modify, alter or nullify any
action or decision of his subordinate in the executive
departments, bureau or offices under him.
When the Pres. issued AO 29 limiting the amount of
incentive benefits,enjoining heads of government agencies
from granting incentive benefits without approval from him
and directing the refund of the excess over the prescribed
amount, the Pres. was just exercising his power of control
over executive departments.
The Pres. issued subject AOs to regulate the grant of
productivity incentive benefits and to prevent discontent,
dissatisfaction and demoralization among government
personnel by committing limited resources of government
for the equal payment of incentives and awards. The Pres.
was only exercising his power of control by modifying the
acts of the heads of the government agencies who granted
incentive benefits to their employees without appropriate
clearance from the Office of the Pres., thereby resulting in
the uneven distribution of government resources.
The President’s duty to execute the law is of constitutional
origin. So, too, is his control of executive departments.
6) Dela Llana v. Alba
FACTS: De La Llana, et. al. filed a Petition for Declaratory
Relief and/or for Prohibition, seeking ti enjoin the Minister of
the Budget, the Chairman of the Commission on Audit, and
the Minister of Justice from taking any action implementing
BP 129 which mandates that Justices and judges of inferior
courts from the CA to MTCs, except the occupants of the
Sandiganbayan and the CTA, unless appointed to the
inferior courts established by such act, would be considered
separated from the judiciary. It is the termination of their
incumbency that for petitioners justify a suit of this
character, it being alleged that thereby the security of
tenure provision of the Constitution has been ignored and
disregarded.
ISSUES: W/N BP 129 is unconstitutional for impairing the
security of tenure of the justices and judges in this case?
RULING: It is a well-known rule that valid abolition of
offices is neither removal nor separation of the incumbents.
Of course, if the abolition is void, the incumbent is deemed
never to have ceased to hold office. The rule that the
abolition of an office does not amount to an illegal removal
of its incumbent is the principle that, in order to be valid, the
abolition must be made in good faith.
Removal is to be distinguished from termination by virtue of
valid abolition of the office. There can be no tenure to a
non-existent office. After the abolition, there is in law no
occupant. In case of removal, there is an office with an
occupant who would thereby lose his position. It is in that
sense that from the standpoint of strict law, the question of
any impairment of security of tenure does not arise.
7) Barbo, et. Al. v. CoA
By this Petition for Certiorari under Rule 64 of the Rules of
Court petitioners seek to annul or reverse COA Decision
No. 2000-133[1]dated May 16, 2000 and Resolution[2] dated
February 27, 2003 rendered by the Commission on Audit
(COA). In the said issuances, the COA affirmed its Regional
Director's 1st Indorsement [3] dated June 5, 1998, which in
turn affirmed Notice of Disallowance No. 97-004 (94, 95,
96)[4] dated June 30, 1997 issued by the Special Audit
Team against petitioners Rebecca A. Barbo, Eleonora R.
de Jesus, and Antonio B. Magtibay.
Petitioners are officials of the Local Water Utilities
Administration (LWUA) and designated members of the
Interim Board of Directors of the San Fernando Water
District (SFWD).
On December 4, 1995 and February 12 1996, the LWUA
Board of Trustees issued Board Resolution No. 313, Series
of 1995 and Board Resolution No. 39, Series of
1996 [5] respectively. These Board Resolutions authorized
the Board of Directors of SFWD to receive reimbursable
allowances in the form of Representation and
Transportation Allowance (RATA), Travel Allowance, and
Extraordinary & Miscellaneous Expense (EME); Christmas
Bonus; Uniform Allowance; Rice Allowance; Medical and
Dental Benefits; and Productivity Incentive Bonus.
Pursuant to the said Board Resolutions, petitioners
received EME, Rice Allowance, Christmas Bonus, and
Productivity Bonus from SFWD during the calendar years
starting 1994 until 1996.
On June 30, 1997, a Special Audit Team of COA Regional
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Office No. III at San Fernando, Pampanga audited the
financial accounts of SFWD for the period covering January
1, 1994 to July 15, 1996. The COA Special Audit Team
disallowed the payment of the above-mentioned benefits
and allowances received by petitioners after the same were
found to be excessive and contrary to Sections 228, 162
and 163 of the Government Accounting and Auditing
Manual (GAAM) and to Civil Service Commission (CSC)
Resolution No. 954073[6] in relation to Section 13 of
Presidential Decree (PD) No. 198 (Provincial Water Utilities
Act of 1973) as amended. Thus, petitioners were directed to
refund the benefits and allowances subject of the
disallowance.
Petitioners appealed to the COA Regional Director raising
the following arguments:
1. That CSC Resolution No. 954073 issued in Cruz v.
Cabili cannot extend to appellants, they not having
been made parties to the case;
2. That it applied to appellants, said resolution will
partake the nature of an implementing rule and
regulation which is beyond CSC's jurisdiction to
issue;
3. That DBM, not CSC, is the appropriate authority to
rule on compensation;
4. That Christmas Bonus, Productivity Bonus, Rice
Allowance, and Uniform Allowance are not
compensation;
5. That Extraordinary and Miscellaneous Expenses
are not compensation but reimbursement of
expenses; and
6. That the right of water district directors and the
interim general manager to receive allowances and
other benefits is appropriately recognized by
LWUA.
The Regional Director, in his First Indorsement dated June
5, 1998, affirmed the Special Audit Team's Notice of
Disallowance No. 97-004 (94, 95, 96). The Regional
Director declared that the COA Special Audit Team was
correct in citing CSC Resolution No. 954073, which
resolved the case of LWUA Employees Association for
Progress (LEAP) v. Cabili and de Vera[7], because the said
resolution applied on all fours to petitioners' case. In the
said resolution, the CSC held that it is illegal for any LWUA
officer or employee who sits as member of the Board of
Directors of a water district to receive and collect any
additional, double, or indirect compensation from said water
district, except per diems, pursuant to Section 13 of PD No.
198, as amended.
From the denial of their appeal by the COA Regional
Director, petitioners elevated the matter to the COA via a
petition for review.
In the herein challenged Decision dated May 16, 2000, the
COA denied the petition for review and affirmed the ruling
of the COA Regional Director as contained in its First
Indorsement. The COA stressed that the Directors of local
water districts (LWDs) were prohibited from receiving
compensation other than per diems and that LWUA Board
Resolution Nos. 313 and 39 were contrary to the law which
it intended to implement, specifically, Section 13 of PD No.
198, as amended. Citing the case Peralta v. Mathay,[8] the
COA declared that the subject bonuses and allowances
received by petitioners constituted additional compensation
or remuneration. The dispositive portion of the decision
reads:
PREMISES CONSIDERED, the instant Petition for Review
of Mr. Simplicio Belisario, et al. [herein petitioners included],
is hereby denied. Accordingly, the subject disallowances
are affirmed with all officers and employees who received
the bonuses and allowances liable for their settlement
together with the officers named in the Notice of
Disallowance, namely: Mr. Dionisio Polintan, General
Manager, Ms. Merlita Garcia, Finance Officer, and Ms.
Arsenia Sicat, Cashier / Property Management Supervisor.
(Words in brackets ours)
Petitioners' motion for reconsideration was denied by the
COA in its challenged Resolution dated February 27, 2003.
Thus, petitioners now come to this Court, imputing grave
abuse of discretion amounting to lack of jurisdiction on the
part of the COA in issuing COA Decision No. 2000-133 and
February 27, 2003 Resolution. Specifically, petitioners raise
the following issues:
I. WHETHER OR NOT RESPONDENT HAS THE
JURISDICTION TO MOTU PROPRIO DECLARE
LWUA BOARD RESOLUTION NO. 313, SERIES
OF 1995, AS AMENDED BY RESOLUTION NO.
39, SERIES OF 1996, TO BE TOTALLY IN
CONFLICT WITH SEC. 13 OF PD NO. 198, AS
AMENDED.
II. WHETHER OR NOT SEC. 13, PD NO. 198, AS
AMENDED, PROHIBIT PETITIONERS'
ENTITLEMENT TO RATA, EME, BONUSES AND
OTHER BENEFITS AND ALLOWANCES.
III. WHETHER OR NOT PETITIONERS ARE LIABLE
TO SETTLE / REFUND THE DISALLOWED
ALLOWANCES, BONUSES AND OTHER
BENEFITS RECEIVED BY PETITIONERS.
The petition is partly meritorious.
Petitioners contend that the COA lacks jurisdiction to
declare whether or not LWUA Board Resolution Nos. 313
and 39 are consistent with Section 13 of PD No. 198, as
amended, on matters pertaining to the compensation and
"other benefits" of the Directors of the LWD. This is
allegedly the function of the courts.
The Court has already settled this issue in a myriad of
cases.[9] Particularly, in Rodolfo S. de Jesus [Catbalogan
Water District] v. COA,[10] the Court upheld the authority and
jurisdiction of the COA to rule on the legality of the
disbursement of government funds by a water district and
declared that such power does not conflict with the
5
jurisdiction of the courts, the DBM, and the LWUA. Citing
Section 2, Subdivision D, Article IX of the 1987
Constitution the Court declared that it is the mandate of the
COA to audit all government agencies, including
government-owned and controlled corporations with original
charters. Indeed, the Constitution specifically vests in the
COA the authority to determine whether government
entities comply with laws and regulations in disbursing
government funds, and to disallow illegal or irregular
disbursements of government funds.[12] This independent
constitutional body is tasked to be vigilant and
conscientious in safeguarding the proper use of the
government's, and ultimately the people's, property.
Anent the second issue, a water district is a government-
owned and controlled corporation with a special charter
since it is created pursuant to a special law, Presidential
Decree (PD) 198. It is undeniable that PD 198 expressly
prohibits the grant of RATA, EME, and bonuses to
members of the board of Water Districts. Section 13 of PD
198, as amended, reads as follows:
Compensation. - Each director shall receive a per diem, to
be determined by the board, for each meeting of the board
actually attended by him, but no director shall receive per
diems in any given month in excess of the equivalent of the
total per diems of four meetings in any given month. No
director shall receive other compensation for services to the
district.
Any per diem in excess of P50 shall be subject to approval
of the Administration.
In Baybay Water District v. Commission on Audit,[14] the
members of the board of Baybay Water District also
questioned the disallowance by the COA of payment of
RATA, rice allowance and excessive per diems. The Court
ruled that pursuant to PD 198, members of the board of
water districts cannot receive allowances and benefits more
than those allowed by PD 198. Construing Section 13 of PD
198, in Baybay, the Court declared:
xxx Under §13 of this Decree, per diem is precisely
intended to be the compensation of members of board of
directors of water districts. Indeed, words and phrases in a
statute must be given their natural, ordinary, and
commonly-accepted meaning, due regard being given to
the context in which the words and phrases are used. By
specifying the compensation which a director is entitled to
receive and by limiting the amount he/she is allowed to
receive in a month, and, in the same paragraph, providing
"No director shall receive other compensation" than the
amount provided for per diems, the law quite clearly
indicates that directors of water districts are authorized to
receive only the per diem authorized by law and no other
compensation or allowance in whatever form.
Section 13 of PD 198 is clear enough that it needs no
interpretation. It expressly prohibits the grant of
compensation other than the payment of per diem, thus
preempting the exercise of any discretion by water districts
in paying other allowances and bonuses.
Lastly, the petitioners claim that they are not liable to settle
or refund the disallowed payments of benefits and
allowances which they have received in good faith and
as de jure officers of SFWD.

While we sustain the disallowance of the above benefits by

respondent COA, however, we find that the SFWD affected
personnel who received the above mentioned benefits and
privileges acted in good faith under the honest belief that
Board Resolution Nos. 313 and 39 authorized such
payment.

In Abanilla v. Commission On Audit citing Querubin v.

Regional Cluster Director, Legal and Adjudication
Office, COA Regional Office VI, Pavia, Iloilo City,[16] this
Court held:

Considering, however, that all the parties here acted in

good faith, we cannot countenance the refund of subject
incentive benefits for the year 1992, which amounts the
petitioners have already received. Indeed, no indicia of bad
faith can be detected under the attendant facts and
circumstances. The officials and chiefs of offices concerned
disbursed such incentive benefits in the honest belief that
the amounts given were due to the recipients and the latter
accept the same with gratitude, confident that they richly
deserve such benefits.

x x x. Petitioners here received the additional allowances

and bonuses in good faith under the honest belief that
LWUA Board Resolution No. 313 authorized such payment.
At the time petitioners received the additional allowances
and bonuses, the Court had not yet decided Baybay Water
District. Petitioners had no knowledge that such payment
was without legal basis. Thus, being in good faith,
petitioners need not refund the allowances and bonuses
they received but disallowed by the COA.

The foregoing disquisitions were also applied to the more

recent cases of De Jesus [Metro Cariaga Water
District];[17] Molen [Metro Iloilo Water District]; and Magno
[Mangaldan Water District].[18] The same reasoning and
conclusions of the Court were reiterated in de Jesus v.
CSC[19] and Cabili and de Vera v. CSC.[20] We find no
reason to depart from the rulings in these cases which
essentially involve the same issues as the instant case.

WHEREFORE, the instant petition is hereby PARTIALLY

GRANTED. COA Decision No. 2000-133 dated May 16,
2000 and Resolution dated February 27, 2003 are
hereby AFFIRMED with the MODIFICATION that the
petitioners need not refund the benefits and allowances
disallowed by the COA.