[G.R. No. 106296. July 5, 1996]

CRISOSTOMO, vs. THE COURT OF APPEALS

MENDOZA, J.:

This is a petition to review the decision of the Court of Appeals dated July 15, 1992, the dispositive portion of which reads:

WHEREFORE, the present petition is partially granted. The questioned Orders and writs directing (1) “reinstatement” of respondent Isabelo T. Crisostomo to the position of “President of the Polytechnic University of the Philippines,” and (2) payment of “salaries and benefits” which said respondent failed to receive during his suspension insofar as such payment includes those accruing after the abolition of the PCC and its transfer to the PUP, are hereby set aside. Accordingly, further proceedings consistent with this decision may be taken by the court a quo to determine the correct amounts due and payable to said respondent by the said university.

The background of this case is as follows:

Petitioner Isabelo Crisostomo was President of the Philippine College of Commerce (PCC), having been appointed to that position by the President of the Philippines on July 17, 1974.

During his incumbency as president of the PCC, two administrative cases were filed against petitioner for illegal use of government vehicles, misappropriation of construction materials belonging to the college, oppression and harassment, grave misconduct, nepotism and dishonesty. On June 14, 1976, three (3) informations for violation of Sec. 3 (e) of the Anti-Graft and Corrupt Practices Act (R.A. No. 3019, as amended) were filed against him. The informations alleged that he appropriated for himself a bahay kubo, which was intended for the College, and construction materials worth P250,000.00, more or less. Petitioner was also accused of using a driver of the College as his personal and family driver.[1]

On October 22, 1976, petitioner was preventively suspended from office pursuant to R.A. No. 3019, § 13, as amended. In his place Dr. Pablo T. Mateo, Jr. was designated as officer-in-charge on November 10, 1976, and then as Acting President on May 13, 1977.

On April 1, 1978, P.D. No. 1341 was issued by then President Ferdinand E. Marcos, CONVERTING THE PHILIPPINE COLLEGE OF COMMERCE INTO A POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES, ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS CURRICULAR OFFERINGS.

Mateo continued as the head of the new University. On April 3, 1979, he was appointed Acting President and on March 28, 1980, as President for a term of six (6) years.

On July 11, 1980, the Circuit Criminal Court of Manila rendered judgment acquitting petitioner of the charges against him. The dispositive portion of the decision reads:

On February 12, 1992, petitioner filed with the Regional Trial Court a motion for execution of the judgment, particularly the part ordering his reinstatement to the position of president of the PUP and the payment of his salaries and other benefits during the period of suspension.

On July 15, 1992, the Seventh Division of the Court of Appeals rendered a decision,[2] the dispositive portion of which is set forth at the beginning of this opinion. Said decision set aside the orders and writ of reinstatement issued by the trial court. The payment of salaries and benefits to petitioner accruing after the conversion of the PCC to the PUP was disallowed. Recovery of salaries and benefits was limited to those accruing from the time of petitioner’s suspension until the conversion of the PCC to the PUP. The case was remanded to the trial court for a determination of the amounts due and payable to petitioner.

Hence this petition. Petitioner argues that P.D. No. 1341, which converted the PCC into the PUP, did not abolish the PCC. He contends that if the law had intended the PCC to lose its existence, it would have specified that the PCC was being “abolished” rather than “converted” and that if the PUP was intended to be a new institution, the law would have said it was being “created.” Petitioner claims that the PUP is merely a continuation of the existence of the PCC, and, hence, he could be reinstated to his former position as president.

In part the contention is well taken, but, as will presently be explained, reinstatement is no longer possible because of the promulgation of P.D. No. 1437 by the President of the Philippines on June 10, 1978.

P.D. No. 1341 did not abolish, but only changed, the former Philippine College of Commerce into what is now the Polytechnic University of the Philippines, in the same way that earlier in 1952, R.A. No. 778 had converted what was then the Philippine School of Commerce into the Philippine College of Commerce. What took place was a change in academic status of the educational institution, not in its corporate life. Hence the change in its name, the expansion of its curricular offerings, and the changes in its structure and organization.

The appellate court ruled, however, that the PUP and the PCC are not “one and the same institution” but “two different entities” and that since petitioner Crisostomo’s term was coterminous with the legal

existence of the PCC, petitioner’s term expired upon the abolition of the PCC. In reaching this conclusion, the Court of Appeals took into account the following:

a) After respondent Crisostomo’s suspension, P.D. No. 1341 (entitled “CONVERTING THE PHILIPPINE COLLEGE OF COMMERCE INTO A POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES, ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS CURRICULAR OFFERINGS”) was issued on April 1, 1978. This decree explicitly provides that PUP’s objectives and purposes cover not only PCC’s offering of programs “in the field of commerce and business administration” but also “programs in other polytechnic areas” and “in other fields such as agriculture, arts and trades and fisheries . . .” (section 2). Being a university, PUP was conceived as a bigger institution absorbing, merging and integrating the entire PCC and other “national schools” as may be “transferred” to this new state university.

b) The manner of selection and appointment of the university head is substantially different from that provided by the PCC Charter. The PUP President “shall be appointed by the President of the Philippines upon recommendation of the Secretary of Education and Culture after consultation with the University Board of Regents” (section 4, P.D. 1341). The President of PCC, on the other hand, was appointed “by the President of the Philippines upon recommendation of the Board of Trustees” (Section 4, R.A. 778).

c) The composition of the new university’s Board of Regents is likewise different from that of the PCC Board of Trustees (which included the chairman of the Senate Committee on Education and the chairman of the House Committee on Education, the President of the PCC Alumni Association as well as the President of the Chamber of Commerce of the Philippines). Whereas, among others, the NEDA Director-General, the Secretary of Industry and the Secretary of Labor are members of the PUP Board of Regents. (Section 6, P.D. 1341).

d) The decree moreover transferred to the new university all the properties including “equipment and facilities”:

“. . . owned by the Philippine College of Commerce and such other National Schools as may be integrated . . . including their obligations and appropriations . . .” (Sec. 12; Italics supplied).[3]

But these are hardly indicia of an intent to abolish an existing institution and to create a new one. New course offerings can be added to the curriculum of a school without affecting its legal existence. Nor will changes in its existing structure and organization bring about its abolition and the creation of a new one. Only an express declaration to that effect by the lawmaking authority will.

The law does not state that the lands, buildings and equipment owned by the PCC were being “transferred” to the PUP but only that they “stand transferred” to it. “Stand transferred” simply means, for example, that lands transferred to the PCC were to be understood as transferred to the PUP as the new name of the institution.

But the reinstatement of petitioner to the position of president of the PUP could not be ordered by the trial court because on June 10, 1978, P.D. No. 1437 had been promulgated fixing the term of office of presidents of state universities and colleges at six (6) years, renewable for another term of six (6) years, and authorizing the President of the Philippines to terminate the terms of incumbents who were not reappointed.

In this case, Dr. Pablo T. Mateo Jr., who had been acting president of the university since April 3, 1979, was appointed president of PUP for a term of six (6) years on March 28, 1980, with the result that petitioner’s term was cut short. In accordance with § 7 of the law, therefore, petitioner became entitled only to retirement benefits or the payment of separation pay. Petitioner must have recognized this fact, that is why in 1992 he asked then President Aquino to consider him for appointment to the same position after it had become vacant in consequence of the retirement of Dr. Prudente.

WHEREFORE, the decision of the Court of Appeals is MODIFIED by SETTING ASIDE the questioned orders of the Regional Trial Court directing the reinstatement of the petitioner Isabelo T. Crisostomo to the position of president of the Polytechnic University of the Philippines and the payment to him of salaries and benefits which he failed to receive during his suspension in so far as such payment would include salaries accruing after March 28, 1980 when petitioner Crisostomo’s term was terminated. Further proceedings in accordance with this decision may be taken by the trial court to determine the amount due and payable to petitioner by the university up to March 28, 1980.

SO ORDERED.

G.R. No. 115844 August 15, 1997

CESAR G. VIOLA, Chairman, Brgy. 167, Zone 15, District II, Manila, petitioner,

vs.

HON. RAFAEL M. ALUNAN III, Secretary DILG, ALEX L. DAVID, President/Secretary General, National Liga ng mga Barangay, LEONARDO L. ANGAT, President, City of Manila, Liga ng mga Barangay, respondents.

MENDOZA, J.:

This is a petition for prohibition challenging the validity of Art. III, §§ 1-2 of the Revised Implementing Rules and Guidelines for the General Elections of the Liga ng mga Barangay Officers so far as they provide for the election of first, second and third vice presidents and for auditors for the National Liga ng mga Barangay and its chapters. The provisions in question read:

Petitioner Cesar G. Viola brought this action as barangay chairman of Brgy. 167, Zone 15, District II, Manila against then Secretary of Interior and Local Government Rafael M. Alunan III, Alex L. David, president/secretary general of the National Liga ng mga Barangay, and Leonardo L. Angat, president of the City of Manila Liga ng mga Barangay, to restrain them from carrying out the elections for the questioned positions on July 3, 1994.

Petitioner's contention is that the positions in question are in excess of those provided in the Local Government Code (R.A. No. 7160), §493 of which mentions as elective positions only those of president, vice president, and five members of the board of directors in each chapter at the municipal, city, provincial, metropolitan political subdivision, and national levels. Petitioner argues that, in providing for the positions of first, second and third vice presidents and auditor for each chapter, §§1-2 of the Implementing Rules expand the number of positions authorized in §493 of the Local Government Code in violation of the principle that implementing rules and regulations cannot add or detract from the provisions of the law they are designed to implement.

Petitioner's contention that the additional positions in question have been created without authority of law is untenable. To begin with, the creation of these positions was actually made in the Constitution and By-laws of the Liga ng Mga Barangay, which was adopted by the First Barangay National Assembly on January 11, 1994. This Constitution and By-laws provide in pertinent parts:

ARTICLE VI

OFFICERS AND DIRECTORS

Sec. 1. Organization of Board of Directors of Local Chapters. — The chapters shall directly elect their respective officers, namely, a president; executive vice president; first, second, and third vice presidents; auditor; and five (5) members to constitute the Board of Directors of their respective chapter. Thereafter, the Board shall appoint a secretary, treasurer, and public relations officer from among the five (5) members, with the rest serving as Directors of Board. The Board may create such other positions as it may deem necessary for the management of the chapter. Pending elections of the president of the municipal, city, provincial and metropolitan chapters of the Liga, the incumbent presidents of the ABCs of the municipality, city province and Metropolitan Manila shall continue to act as presidents of the corresponding Liga chapters, subject to the provisions of the Local Government Code of 1991.

Sec. 2. Organization of Board of Directors of the National Liga. — The National Liga shall be composed of the presidents of the provincial Liga chapters, highly urbanized and independent component city chapters, and the metropolitan chapter who shall directly elect their respective officers, namely, a president, executive vice president; first, second, and third vice president, auditor, secretary general; and five (5) members to constitute the Board of Directors of the National Liga. Thereafter, the Board shall appoint a treasurer, secretary and public relations officers from among the five (5) members with the rest serving as directors of the Board. The Board may create such other positions as it may deem necessary for the management of the National Liga. Pending election of Secretary-General, the incumbent president of the Pambansang Katipunan ng mga Barangay (PKB) shall act as the Secretary-General. The incumbent members of the Board of the PKB, headed by the Secretary-General who continue to be presidents of the respective chapters of the Liga to which they belong, shall constitute a committee to exercise the powers and duties of the National Liga and with the primordial responsibility of drafting a Constitution and By-Laws needed for the organization of the Liga as a whole pursuant to the provisions of the Local Government Code of 1991.

The post of executive vice president is in reality that of the vice president in §493 of the LGC, so that the only additional positions created for each chapter in the Constitution and By-laws are those of first, second and third vice presidents and auditor. Contrary to petitioner's contention, the creation of the additional positions is authorized by the LGC which provides as follows:

§493. Organization. The liga at the municipal, city, provincial, Metropolitan political subdivision, and national levels directly elect a president, a vice-president, and five (5) members of the board of directors. The board shall appoint its secretary and treasurer and create such other positions as it may deem necessary for the management of the chapter. A secretary-general shall be elected form among the members of the national liga and shall be charged with the overall operation of the liga on the national level. The board shall coordinate the activities of the chapters of the liga. (emphasis added)

This provision in fact requires — and not merely authorizes the board of directors to "create such other positions as it may deem necessary for the management of the chapter" and belies petitioner's claim that said provision (§493) limits the officers of a chapter to the president, vice president, five members of the board of directors, secretary, and treasurer. That Congress can delegate the power to create positions such as these has been settled by our decisions upholding the validity of reorganization statutes authorizing the President of the Philippines to create, abolish or merge officers in the executive department. 2 The question is whether, in making a delegation of this power to the board of directors of each chapter of the Liga ng Mga Barangay, Congress provided a sufficient standard so that, in the phrase of Justice Cardozo, administrative discretion may be "canalized within proper banks that keep it from overflowing." 3

Statutory provisions authorizing the President of the Philippines to make reforms and changes in government owned or controlled corporations for the purpose of promoting "simplicity, economy and efficiency" 4 in their operations and empowering the Secretary of Education to prescribe minimum standards of "adequate and efficient instruction" 5 in private schools and colleges have been found to be sufficient for the purpose of valid delegation. Judged by these cases, we hold that §493 of the Local Government Code, in directing the board of directors of the liga to "create such other positions as may be deemed necessary for the management of the chapter[s]," embodies a fairly intelligible standard. There is no undue delegation of power by Congress.

Justice Davide contends in dissent, however, that "only the Board of Directors — and not any other body — is vested with the power to create other positions as may be necessary for the management of the chapter" and that, in any case, there is no showing that the Barangay National Assembly was authorized to draft the Constitution and By-laws because he is unable to find any creating it.

But it is contended in the dissent that "Section 493 of the LGC . . . vests the power to create additional positions in the Board of Directors of the chapter." The implication seems to be that the board of the directors at the national level did not have that power. It is necessary to consider the organizational structure of the Liga ng mga Barangay as provided in the LGC, as follows:

While the board of directors of a local chapter can create additional positions to provide for the needs of the chapter, the board of directors of the National Liga must be deemed to have the power to create additional positions not only for its management but also for that of all the chapters at the municipal, city, provincial and metropolitan political subdivision levels. Otherwise the National Liga would be no different from the local chapters. There would then be only so many local chapters without a national one, when what is contemplated in the above-quoted provisions of the LGC is that there should be one Liga ng mga Barangay with local chapters at all levels of local government units. The dissent, by denying to the board of directors at the National Liga the power to create additional positions in the local chapters, would reduce such board to a board of a local chapter. The fact is that §493 grants the power

to create positions not only to the boards of the local chapters but to the board of the Liga at the national level as well.

Indeed what was done in the Constitution and By-laws of their liga was to create additional positions in each chapters, whether national or local, without however precluding the boards of directors of the chapters as well as that of the national liga from creating other positions for their peculiar needs. The creation by the board of the National Liga of the positions of first, second and third vice presidents, auditors and public relations officers was intended to provide uniform officers for the various chapters in line with the mandate in Art. 210(g)(2) of the Rules and Regulations Implementing the Local Government Code of 1991 to the Barangay National Assembly to "formulate uniform constitution and by-laws applicable to the national liga and all local chapters." The various chapters could have different minor officers depending on their local needs, but they must have the same major elective officers, meaning to say, the additional vice-presidents and auditors.

The dissent further argues that, following the rule of ejusdem generis, what may be created as additional positions can only be appointive ones because the positions of secretary and treasurer are appointive positions. The rule might apply if what is involved is the appointment of other officers. But what we are dealing with in this case is the creation of additional positions. Section 493 actually gives the board the power to "[1] appoint its secretary and treasurer and [2] create such other positions as it may deem necessary for the management of the chapter." The additional positions to be created need not therefore be appointive positions.

Nor is it correct to say that §493, in providing that additional positions to be created must be those which are "deemed necessary for the management of the chapter," contemplates only appointive positions. Management positions are not necessarily limited to appointive positions. Elective officers, such as the president and vice-president, can be expected to be involved in the general administration or management of the chapter. Hence, the creation of other elective positions which may be deemed necessary for the management of the chapter is within the purview of §493.

WHEREFORE, the petition for prohibition is DISMISSED for lack of merit.

SO ORDERED.

Separate Opinions

DAVIDE, JR., J., dissenting;

In light of the disclosure in the revised ponencia that the creation of the questioned additional positions of Executive Vice-President, First, Second and Third Vice-Presidents, and Auditor, embodied in Article III of the Revised Implementing Rules and Guidelines for the General Elections of Liga ng Mga Barangay Officers was made by way of the Constitution and By Laws adopted by the First Barangay National Assembly on 11 January 1994, the ultimate issue then to be resolved is whether or not the Barangay Assembly is empowered to create said additional positions.

Section 493 of the Local Government Code of 1991 (LGC) specifically provides as follows:

§493. Organization. The liga at the municipality, city, provincial, metropolitan political subdivision, and national levels directly elect a president, a vice-president, and five (5) members of the board of directors. The board shall appoint its secretary and treasurer and create such other positions as it may deem necessary for the management of the chapter. A secretary-general shall be elected from among the members of the national liga and shall be charged with the overall operation of the liga on the national level. The board shall coordinate the activities of the chapters of the liga. (Emphasis supplied).

Article VI of the Constitution and By-Laws of the Liga ng Mga Barangay provides as follows:

ARTICLE VI

OFFICERS AND DIRECTORS

Sec. 1. Organization of Board of Directors of Local Chapters. — The chapter shall directly elect their respective officers, namely a president; executive vice president; first, second, and third vice-presidents; auditor; and five (5) members to constitute the Board of Directors of their respective chapter. Thereafter, the Board shall appoint a secretary, treasurer, and public relations officers from among the five (5) members, with rest serving as Directors of Board. The Board may create such other positions as it may deem necessary for the management of the chapter. Pending elections of the president of the municipality, city, provincial and metropolitan chapters of the Liga, the incumbent presidents of the ABCs of the municipality, city, province and Metropolitan Manila shall continue to act as presidents of the corresponding Liga chapters, subject to the provisions of the Local Government Code of 1991.

Sec. 2. Organization of Board of Directors of the National Liga. — The National Liga shall be composed of the presidents of the provincial Liga chapters, highly urbanized and independent component city chapters, and the metropolitan chapter who shall directly elect their respective officers, namely, a president, executive vice president; first, second, and third vice presidents, auditor, secretary general; and five (5) members to constitute the Board of Directors of the National Liga. Thereafter, the Board shall appoint a treasurer, secretary and public relations officers from among the five (5) members with the rest serving as directors of the Board. The Board may create such other positions as it may deem necessary for the management of the National Liga. Pending election of Secretary-General, the incumbent president of the Pambansang Katipunan ng mga Barangay (PKB) shall act as the Secretary-General who continue to be presidents of the respective chapters of the Liga to which they belong, shall constitute a committee to exercise the powers and duties of the National Liga and with the primordial responsibility of drafting a Constitution and By-Laws needed for the organization of the Liga as a whole pursuant to the provisions of the Local Government Code of 1991. (Emphasis supplied).

Sections 1 and 2 of Article III of the Revised Implementing Rules and Guidelines for the General Elections of Liga ng Mga Barangay Officers read as follows:

§1. Local Liga Chapters. The Municipal City Metropolitan and Provincial Chapters shall directly elect the following officers and directors to constitute their respective Board of Directors, namely:

1.1 President

1.2 Executive Vice-President

1.3 First Vice-President

1.4 Second Vice-President

1.5 Third Vice-President

1.6 Auditor

1.7 Five (5) Directors

§2. National Liga. The National Liga shall directly elect the following officers and directors to constitute the National Liga Board of Directors namely:

2.1 President

2.2 Executive Vice-President

2.3 First Vice-President

2.4 Second Vice-President

2.5 Third Vice-President

2.6 Secretary General

2.7 Auditor

2.8 Five (5) Directors

To implement Section 493 of the Local Government Code, Article 211(f) of the Rules and Regulations Implementing the Local Government Code of 1991 provides:

(f) Organizational Structure —

(1) The national liga and its local chapters shall directly elect their respective officers, namely: a president, vice president, and five (5) members of the board of directors. The board shall appoint its secretary and treasurer and create such other positions as it may deem necessary for the management of the chapter. Pending election of presidents of the municipal, city, provincial, and metropolitan chapters of the liga, the incumbent presidents of the association of barangay councils in the municipality, city, province, and Metropolitan Manila shall continue to act as presidents of the corresponding chapters under this Rule. (Emphasis supplied).

(2) A secretary-general shall be elected from among the members of the national liga who shall be responsible for the overall operation of the liga. Pending election of a secretary-general under this rule, the incumbent president of the pambansang katipunan ng mga barangay shall act as the secretary-general. This incumbent members of the board of the pambansang katipunan ng mga barangay, headed by the secretary-general, who continue to be presidents of the respective chapters of the liga to which they belong, shall constitute a committee to exercise the powers and duties of the national liga and draft or amend the constitution and by-laws of the national liga to conform to the provisions of this Rule.

(3) The board of directors shall coordinate the activities of the various chapters of the liga.

It may readily be observed that Section 493 of the LGC and Article 211(f) of the Implementing Rules are clear that the officers of the national liga and its local chapters are: (1) the President, (2) Vice President and (3) five (5) members of the Board of Directors. In turn, it is the Board of Directors which appoints the secretary and treasurer and is empowered to "create such other positions as it may deem necessary for the management of the chapter concerned." It is, therefore, unequivocally clear that only the Board of Directors — and not any other body — which is vested with the power to create other positions as may be necessary for the management of the chapter.

The ponencia maintains that since the questioned positions were provided for in the Constitution and By-Laws of the Liga ng Mga Barangay adopted during its First Barangay National Assembly on 11 January 1994, then such additional positions "were as much the creations of the local chapters as of the national league. The barangay themselves, through the constitution and by-laws of their liga, created the additional positions without precluding the boards of directors of the chapters as well as that of the national liga from creating other positions."

I beg to differ. In the first place, I am unable to find any provision of the LGC creating or establishing the Barangay National Assembly. What the LGC has created is the Liga ng Mga Barangay (Sec. 491) with local chapters at the municipal, city, provincial and metropolitan subdivision levels (Sec. 492). Under the Implementing Rules of the LGC (Art. 211[e][4]), the National Liga Ng Mga Barangay is composed of the duly elected presidents of highly urbanized city chapters, provincial chapters and metropolitan chapters.

Pursuant to Article 211[f][2] of the Implementing Rules, the members of the Board of the Pambansang Katipunan ng Mga Barangay, headed by the Secretary-General, were constituted into a committee to exercise the powers and duties of the national liga and draft or amend the Constitution and By-Laws of the Liga. There is at all no showing that this committee was the so-called First Barangay National Assembly which convened on 11 January 1994.

Second, even assuming that the committee was the so-called First Barangay National Assembly of 11 January 1994, said committee was not authorized to create, by virtue of the Constitution and By-Laws it enacted additional positions for the national liga and the liga at the local levels. The aforementioned Article 211(g), limits the power of this committee, as follows:

(g) Constitution and By-Laws of the Liga —

(1) All other matters not provided under this Rule affecting the internal organization of the liga shall be governed by its constitution and by-laws, unless inconsistent with the Constitution and applicable laws, rules and regulations.

(2) The committee created in this Article shall formulate uniform constitution and by-laws applicable to the national liga and all local chapters. The committee shall convene the national liga to ratify the constitution and by-laws within six (6) months from issuance of these Rules.

Note that the constitution and by-laws which the committee may enact must not be inconsistent with . . . "applicable laws, rules and regulations." Of course, one of the laws that come to mind is the LGC of 1991 and the rules and regulations could nothing be than the Rules Implementing the Local Government Code of 1991. It goes without saying that the LGC and its Implementing Rules must perforce be heeded. It bears repeating that as they stand, Section 493 of the LGC and Article 211 (f) of the Implementing Rules limit the officers to the: President, Vice President and the board of directors composed of five (5) members. The latter then appoints a secretary and a treasurer and may create such

other positions as it may deem necessary for the management of the chapter. Plainly, neither the LGC nor the Implementing Rules authorizes any person or entity, other than the Board of Directors, to create additional positions.

Third, it would be a clear case of judicial legislation to declare that since the additional positions were created in the Constitution and By-Laws of the Liga ng Mga Barangay, then they "were as much as the creations of the local chapters as of the national league." This runs afoul of Section 493 of the LGC which vests the power to create additional positions only in the Board of Director of the chapter.

The claim in the ponencia that the creation of additional positions in the Constitution and By-Laws does not preclude the board of directors of the chapter as well as that of the national liga from creating other positions, is inconsistent with the earlier proposition that such new positions, "were as much the creations of the local chapters and the league" and the further justification proferred that the creation of the national positions "was intended to provide uniform officers for the various chapters and the national liga was in line with the mandate of the assembly to "formulate uniform constitution and by-laws applicable to the national liga and all local chapters." If this were so, then the chapters are barred from creating additional positions other than those created in the Constitution and By-Laws of the Liga ng Mga Barangay.

Finally, it may likewise be observed that Section 493 merely allows the creation of other appointive positions "as it may deem necessary for the management of the chapter." I lay stress on the term "appointive," in light of the clause preceding the grant of the power, which reads: "The board shall appoint its secretary and treasurer. Following the rule of ejusdem generis in statutory construction, the "other positions" which may be created must be of the same category, viz., APPOINTIVE, as that of secretary and treasurer. These other positions may then be that of an assistant secretary, assistant treasurer, auditor, public relations officer, or information officer, or even a sergeant-at-arms. Further, under Section 493, the new positions which may be created are those "deemed necessary for the management of the chapter," which may only pertain to the day-to-day business and affairs of the liga chapter, and not to policy formulation which may be exercised the executive officers and Board of Directors. In short, the section does not empower the local liga to create elective positions other than that of President, Vice-President and Board of Directors.

For the foregoing reasons, I vote to declare void, for lack of legislative authority Sections 1 and 2 of Article III of the Implementing Rules and Guidelines for the General Elections of the Liga ng Mga Barangay Officers, and Sections 1 and 2 of Article VI of the Constitution and By-Laws of the Liga ng Mga

Barangay, insofar as they relate to the creation of the positions of executive vice president, first, second and third vice-presidents, and auditor.

Romero, Vitug and Panganiban, JJ., concur.

LOUIS “BAROK” C. BIRAOGO,

- versus -

THE PHILIPPINE TRUTH COMMISSION OF 2010,

G.R. No. 192935

MENDOZA, J.:

When the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them.

--- Justice Jose P. Laurel[1]

The role of the Constitution cannot be overlooked. It is through the Constitution that the fundamental powers of government are established, limited and defined, and by which these powers are distributed among the several departments.[2] The Constitution is the basic and paramount law to which all other laws must conform and to which all persons, including the highest officials of the land, must defer.[3] Constitutional doctrines must remain steadfast no matter what may be the tides of time. It cannot be simply made to sway and accommodate the call of situations and much more tailor itself to the whims and caprices of government and the people who run it.[4]

For consideration before the Court are two consolidated cases[5] both of which essentially assail the validity and constitutionality of Executive Order No. 1, dated July 30, 2010, entitled “Creating the Philippine Truth Commission of 2010.”

The first case is G.R. No. 192935, a special civil action for prohibition instituted by petitioner Louis Biraogo (Biraogo) in his capacity as a citizen and taxpayer. Biraogo assails Executive Order No. 1 for being violative of the legislative power of Congress under Section 1, Article VI of the Constitution[6] as it usurps the constitutional authority of the legislature to create a public office and to appropriate funds therefor.[7]

The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition filed by petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and Orlando B. Fua, Sr. (petitioners-legislators) as incumbent members of the House of Representatives.

To transform his campaign slogan into reality, President Aquino found a need for a special body to investigate reported cases of graft and corruption allegedly committed during the previous administration.

Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive Order No. 1 establishing the Philippine Truth Commission of 2010 (Truth Commission).

The Philippine Truth Commission (PTC) is a mere ad hoc body formed under the Office of the President with the primary task to investigate reports of graft and corruption committed by third-level public officers and employees, their co-principals, accomplices and accessories during the previous administration, and thereafter to submit its finding and recommendations to the President, Congress and the Ombudsman. Though it has been described as an “independent collegial body,” it is essentially an entity within the Office of the President Proper and subject to his control. Doubtless, it constitutes a public office, as an ad hoc body is one.[8]

To accomplish its task, the PTC shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987. It is not, however, a quasi-judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render awards in disputes between contending parties. All it can do is gather, collect and assess evidence of graft and corruption and make recommendations. It may have subpoena powers but it has no power to cite people in contempt, much less order their arrest. Although it is a fact-finding body, it cannot determine from such facts if probable cause exists as

to warrant the filing of an information in our courts of law. Needless to state, it cannot impose criminal, civil or administrative penalties or sanctions.

Truth commissions have been described as bodies that share the following characteristics: (1) they examine only past events; (2) they investigate patterns of abuse committed over a period of time, as opposed to a particular event; (3) they are temporary bodies that finish their work with the submission of a report containing conclusions and recommendations; and (4) they are officially sanctioned, authorized or empowered by the State.[10] “Commission’s members are usually empowered to conduct research, support victims, and propose policy recommendations to prevent recurrence of crimes. Through their investigations, the commissions may aim to discover and learn more about past abuses, or formally acknowledge them. They may aim to prepare the way for prosecutions and recommend institutional reforms.”[11]

The Thrusts of the Petitions

Barely a month after the issuance of Executive Order No. 1, the petitioners asked the Court to declare it unconstitutional and to enjoin the PTC from performing its functions. A perusal of the arguments of the petitioners in both cases shows that they are essentially the same. The petitioners-legislators summarized them in the following manner:

(a) E.O. No. 1 violates the separation of powers as it arrogates the power of the Congress to create a public office and appropriate funds for its operation.

(b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987 cannot legitimize E.O. No. 1 because the delegated authority of the President to structurally reorganize the Office of the President to achieve economy, simplicity and efficiency does not include the power to create an entirely new public office which was hitherto inexistent like the “Truth Commission.”

(c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it vested the “Truth Commission” with quasi-judicial powers duplicating, if not superseding, those of the Office of the

Ombudsman created under the 1987 Constitution and the Department of Justice created under the Administrative Code of 1987.

(d) E.O. No. 1 violates the equal protection clause as it selectively targets for investigation and prosecution officials and personnel of the previous administration as if corruption is their peculiar species even as it excludes those of the other administrations, past and present, who may be indictable.

(e) The creation of the “Philippine Truth Commission of 2010” violates the consistent and general international practice of four decades wherein States constitute truth commissions to exclusively investigate human rights violations, which customary practice forms part of the generally accepted principles of international law which the Philippines is mandated to adhere to pursuant to the Declaration of Principles enshrined in the Constitution.

(f) The creation of the “Truth Commission” is an exercise in futility, an adventure in partisan hostility, a launching pad for trial/conviction by publicity and a mere populist propaganda to mistakenly impress the people that widespread poverty will altogether vanish if corruption is eliminated without even addressing the other major causes of poverty.

(g) The mere fact that previous commissions were not constitutionally challenged is of no moment because neither laches nor estoppel can bar an eventual question on the constitutionality and validity of an executive issuance or even a statute.”[13]

In their Consolidated Comment,[14] the respondents, through the Office of the Solicitor General (OSG), essentially questioned the legal standing of petitioners and defended the assailed executive order with the following arguments:

1] E.O. No. 1 does not arrogate the powers of Congress to create a public office because the President’s executive power and power of control necessarily include the inherent power to conduct investigations to ensure that laws are faithfully executed and that, in any event, the Constitution, Revised Administrative Code of 1987 (E.O. No. 292), [15] Presidential Decree (P.D.) No. 1416[16] (as amended by P.D. No. 1772), R.A. No. 9970,[17] and settled jurisprudence that authorize the President to create or form such bodies.

2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is no appropriation but a mere allocation of funds already appropriated by Congress.

3] The Truth Commission does not duplicate or supersede the functions of the Office of the Ombudsman (Ombudsman) and the Department of Justice (DOJ), because it is a fact-finding body and not a quasi-judicial body and its functions do not duplicate, supplant or erode the latter’s jurisdiction.

4] The Truth Commission does not violate the equal protection clause because it was validly created for laudable purposes.

From the petitions, pleadings, transcripts, and memoranda, the following are the principal issues to be resolved:

1. Whether or not the petitioners have the legal standing to file their respective petitions and question Executive Order No. 1;

2. Whether or not Executive Order No. 1 violates the principle of separation of powers by usurping the powers of Congress to create and to appropriate funds for public offices, agencies and commissions;

3. Whether or not Executive Order No. 1 supplants the powers of the Ombudsman and the DOJ;

4. Whether or not Executive Order No. 1 violates the equal protection clause; and

5. Whether or not petitioners are entitled to injunctive relief.

Essential requisites for judicial review

Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1, the Court needs to ascertain whether the requisites for a valid exercise of its power of judicial review are present.

Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging the act must have the standing to question the validity of the subject act or issuance; otherwise stated, he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.[19]

Among all these limitations, only the legal standing of the petitioners has been put at issue.

Legal Standing of the Petitioners

The OSG attacks the legal personality of the petitioners-legislators to file their petition for failure to demonstrate their personal stake in the outcome of the case. It argues that the petitioners have not shown that they have sustained or are in danger of sustaining any personal injury attributable to the creation of the PTC. Not claiming to be the subject of the commission’s investigations, petitioners will not sustain injury in its creation or as a result of its proceedings.[20]

The Court disagrees with the OSG in questioning the legal standing of the petitioners-legislators to assail Executive Order No. 1. Evidently, their petition primarily invokes usurpation of the power of the Congress as a body to which they belong as members. This certainly justifies their resolve to take the cudgels for Congress as an institution and present the complaints on the usurpation of their power and rights as members of the legislature before the Court. As held in Philippine Constitution Association v. Enriquez,[21]

To the extent the powers of Congress are impaired, so is the power of each member thereof, since his office confers a right to participate in the exercise of the powers of that institution.

An act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial injury, which can be questioned by a member of Congress. In such a case, any member of Congress can have a resort to the courts.

Indeed, legislators have a legal standing to see to it that the prerogative, powers and privileges vested by the Constitution in their office remain inviolate. Thus, they are allowed to question the validity of any official action which, to their mind, infringes on their prerogatives as legislators.[22]

Power of the President to Create the Truth Commission

In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth Commission is a public office and not merely an adjunct body of the Office of the President.[31] Thus, in order that the President may create a public office he must be empowered by the Constitution, a statute or an authorization vested in him by law. According to petitioner, such power cannot be presumed[32] since there is no provision in the Constitution or any specific law that authorizes the President to create a truth commission.[33] He adds that Section 31 of the Administrative Code of 1987, granting the President the continuing authority to reorganize his office, cannot serve as basis for the creation of a truth commission considering the aforesaid provision merely uses verbs such as “reorganize,” “transfer,” “consolidate,” “merge,” and “abolish.”[34] Insofar as it vests in the President the plenary power to reorganize the Office of the President to the extent of creating a public office, Section 31 is inconsistent with the principle of separation of powers enshrined in the Constitution and must be deemed repealed upon the effectivity thereof.[35]

Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a public office lies within the province of Congress and not with the executive branch of government. They maintain that the delegated authority of the President to reorganize under Section 31 of the Revised Administrative Code: 1) does not permit the President to create a public office, much less a truth commission; 2) is limited to the reorganization of the administrative structure of the Office of the President; 3) is limited to the restructuring of the internal organs of the Office of the President Proper, transfer of functions and transfer of agencies; and 4) only to achieve simplicity, economy and efficiency.[36] Such continuing authority of the President to reorganize his office is limited, and by issuing Executive Order No. 1, the President overstepped the limits of this delegated authority.

The OSG counters that there is nothing exclusively legislative about the creation by the President of a fact-finding body such as a truth commission. Pointing to numerous offices created by past presidents, it argues that the authority of the President to create public offices within the Office of the President Proper has long been recognized.[37] According to the OSG, the Executive, just like the other two branches of government, possesses the inherent authority to create fact-finding committees to assist it in the performance of its constitutionally mandated functions and in the exercise of its administrative functions.[38] This power, as the OSG explains it, is but an adjunct of the plenary powers wielded by the President under Section 1 and his power of control under Section 17, both of Article VII of the Constitution.[39]

It contends that the President is necessarily vested with the power to conduct fact-finding investigations, pursuant to his duty to ensure that all laws are enforced by public officials and employees of his department and in the exercise of his authority to assume directly the functions of the executive department, bureau and office, or interfere with the discretion of his officials.[40] The power of the President to investigate is not limited to the exercise of his power of control over his subordinates in the executive branch, but extends further in the exercise of his other powers, such as his power to discipline subordinates,[41] his power for rule making, adjudication and licensing purposes[42] and in order to be informed on matters which he is entitled to know.[43]

The OSG also cites the recent case of Banda v. Ermita,[44] where it was held that the President has the power to reorganize the offices and agencies in the executive department in line with his constitutionally granted power of control and by virtue of a valid delegation of the legislative power to reorganize executive offices under existing statutes.

Thus, the OSG concludes that the power of control necessarily includes the power to create offices. For the OSG, the President may create the PTC in order to, among others, put a closure to the reported large scale graft and corruption in the government.[45]

The question, therefore, before the Court is this: Does the creation of the PTC fall within the ambit of the power to reorganize as expressed in Section 31 of the Revised Administrative Code? Section 31 contemplates “reorganization” as limited by the following functional and structural lines: (1) restructuring the internal organization of the Office of the President Proper by abolishing, consolidating or merging units thereof or transferring functions from one unit to another; (2) transferring any function under the Office of the President to any other Department/Agency or vice versa; or (3) transferring any agency under the Office of the President to any other Department/Agency or vice versa. Clearly, the provision refers to reduction of personnel, consolidation of offices, or abolition thereof by reason of

economy or redundancy of functions. These point to situations where a body or an office is already existent but a modification or alteration thereof has to be effected. The creation of an office is nowhere mentioned, much less envisioned in said provision. Accordingly, the answer to the question is in the negative.

To say that the PTC is borne out of a restructuring of the Office of the President under Section 31 is a misplaced supposition, even in the plainest meaning attributable to the term “restructure”– an “alteration of an existing structure.” Evidently, the PTC was not part of the structure of the Office of the President prior to the enactment of Executive Order No. 1. As held in Buklod ng Kawaning EIIB v. Hon. Executive Secretary,[46]

But of course, the list of legal basis authorizing the President to reorganize any department or agency in the executive branch does not have to end here. We must not lose sight of the very source of the power – that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as the Administrative Code of 1987), "the President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing authority to reorganize the administrative structure of the Office of the President." For this purpose, he may transfer the functions of other Departments or Agencies to the Office of the President. In Canonizado v. Aguirre [323 SCRA 312 (2000)], we ruled that reorganization "involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions." It takes place when there is an alteration of the existing structure of government offices or units therein, including the lines of control, authority and responsibility between them. The EIIB is a bureau attached to the Department of Finance. It falls under the Office of the President. Hence, it is subject to the President’s continuing authority to reorganize. [Emphasis Supplied]

In the same vein, the creation of the PTC is not justified by the President’s power of control. Control is essentially the power to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter.[47] Clearly, the power of control is entirely different from the power to create public offices. The former is inherent in the Executive, while the latter finds basis from either a valid delegation from Congress, or his inherent duty to faithfully execute the laws.

The question is this, is there a valid delegation of power from Congress, empowering the President to create a public office?

According to the OSG, the power to create a truth commission pursuant to the above provision finds statutory basis under P.D. 1416, as amended by P.D. No. 1772.[48] The said law granted the President the continuing authority to reorganize the national government, including the power to group, consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and classify functions, services and activities, transfer appropriations, and to standardize salaries and materials. This decree, in relation to Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such as Larin v. Executive Secretary.[49]

The Court, however, declines to recognize P.D. No. 1416 as a justification for the President to create a public office. Said decree is already stale, anachronistic and inoperable. P.D. No. 1416 was a delegation to then President Marcos of the authority to reorganize the administrative structure of the national government including the power to create offices and transfer appropriations pursuant to one of the purposes of the decree, embodied in its last “Whereas” clause:

WHEREAS, the transition towards the parliamentary form of government will necessitate flexibility in the organization of the national government.

Clearly, as it was only for the purpose of providing manageability and resiliency during the interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus oficio upon the convening of the First Congress, as expressly provided in Section 6, Article XVIII of the 1987 Constitution. In fact, even the Solicitor General agrees with this view. Thus:

ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the last whereas clause of P.D. 1416 says “it was enacted to prepare the transition from presidential to parliamentary. Now, in a parliamentary form of government, the legislative and executive powers are fused, correct?

SOLICITOR GENERAL CADIZ: Yes, Your Honor.

ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued. Now would you agree with me that P.D. 1416 should not be considered effective anymore upon the promulgation, adoption, ratification of the 1987 Constitution.

SOLICITOR GENERAL CADIZ: Not the whole of P.D. [No.] 1416, Your Honor.

ASSOCIATE JUSTICE CARPIO: The power of the President to reorganize the entire National Government is deemed repealed, at least, upon the adoption of the 1987 Constitution, correct.

SOLICITOR GENERAL CADIZ: Yes, Your Honor.[50]

While the power to create a truth commission cannot pass muster on the basis of P.D. No. 1416 as amended by P.D. No. 1772, the creation of the PTC finds justification under Section 17, Article VII of the Constitution, imposing upon the President the duty to ensure that the laws are faithfully executed. Section 17 reads:

Section 17. The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied).

As correctly pointed out by the respondents, the allocation of power in the three principal branches of government is a grant of all powers inherent in them. The President’s power to conduct investigations to aid him in ensuring the faithful execution of laws – in this case, fundamental laws on public accountability and transparency – is inherent in the President’s powers as the Chief Executive. That the authority of the President to conduct investigations and to create bodies to execute this power is not explicitly mentioned in the Constitution or in statutes does not mean that he is bereft of such authority.[51] As explained in the landmark case of Marcos v. Manglapus:[52]

x x x. The 1987 Constitution, however, brought back the presidential system of government and restored the separation of legislative, executive and judicial powers by their actual distribution among three distinct branches of government with provision for checks and balances.

It would not be accurate, however, to state that "executive power" is the power to enforce the laws, for the President is head of state as well as head of government and whatever powers inhere in such positions pertain to the office unless the Constitution itself withholds it. Furthermore, the Constitution itself provides that the execution of the laws is only one of the powers of the President. It also grants the President other powers that do not involve the execution of any provision of law, e.g., his power over the country's foreign relations.

On these premises, we hold the view that although the 1987 Constitution imposes limitations on the exercise of specific powers of the President, it maintains intact what is traditionally considered as within the scope of "executive power." Corollarily, the powers of the President cannot be said to be limited only to the specific powers enumerated in the Constitution. In other words, executive power is more than the sum of specific powers so enumerated.

It has been advanced that whatever power inherent in the government that is neither legislative nor judicial has to be executive. x x x.

Indeed, the Executive is given much leeway in ensuring that our laws are faithfully executed. As stated above, the powers of the President are not limited to those specific powers under the Constitution.[53] One of the recognized powers of the President granted pursuant to this constitutionally-mandated duty is the power to create ad hoc committees. This flows from the obvious need to ascertain facts and determine if laws have been faithfully executed. Thus, in Department of Health v. Camposano,[54] the authority of the President to issue Administrative Order No. 298, creating an investigative committee to look into the administrative charges filed against the employees of the Department of Health for the anomalous purchase of medicines was upheld. In said case, it was ruled:

The Chief Executive’s power to create the Ad hoc Investigating Committee cannot be doubted. Having been constitutionally granted full control of the Executive Department, to which respondents belong, the President has the obligation to ensure that all executive officials and employees faithfully

comply with the law. With AO 298 as mandate, the legality of the investigation is sustained. Such validity is not affected by the fact that the investigating team and the PCAGC had the same composition, or that the former used the offices and facilities of the latter in conducting the inquiry. [Emphasis supplied]

It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is to allow an inquiry into matters which the President is entitled to know so that he can be properly advised and guided in the performance of his duties relative to the execution and enforcement of the laws of the land. And if history is to be revisited, this was also the objective of the investigative bodies created in the past like the PCAC, PCAPE, PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa Commission. There being no changes in the government structure, the Court is not inclined to declare such executive power as non-existent just because the direction of the political winds have changed.

On the charge that Executive Order No. 1 transgresses the power of Congress to appropriate funds for the operation of a public office, suffice it to say that there will be no appropriation but only an allotment or allocations of existing funds already appropriated. Accordingly, there is no usurpation on the part of the Executive of the power of Congress to appropriate funds. Further, there is no need to specify the amount to be earmarked for the operation of the commission because, in the words of the Solicitor General, “whatever funds the Congress has provided for the Office of the President will be the very source of the funds for the commission.”[55] Moreover, since the amount that would be allocated to the PTC shall be subject to existing auditing rules and regulations, there is no impropriety in the funding.

Power of the Truth Commission to Investigate

The President’s power to conduct investigations to ensure that laws are faithfully executed is well recognized. It flows from the faithful-execution clause of the Constitution under Article VII, Section 17 thereof.[56] As the Chief Executive, the president represents the government as a whole and sees to it that all laws are enforced by the officials and employees of his department. He has the authority to directly assume the functions of the executive department.[57]

Invoking this authority, the President constituted the PTC to primarily investigate reports of graft and corruption and to recommend the appropriate action. As previously stated, no quasi-judicial powers have been vested in the said body as it cannot adjudicate rights of persons who come before it. It has been said that “Quasi-judicial powers involve the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by

law itself in enforcing and administering the same law.”[58] In simpler terms, judicial discretion is involved in the exercise of these quasi-judicial power, such that it is exclusively vested in the judiciary and must be clearly authorized by the legislature in the case of administrative agencies.

The distinction between the power to investigate and the power to adjudicate was delineated by the Court in Cariño v. Commission on Human Rights.[59] Thus:

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into systematically: "to search or inquire into: x x to subject to an official probe x x: to conduct an official inquiry." The purpose of investigation, of course, is to discover, to find out, to learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the facts inquired into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" "to inquire; to make an investigation," "investigation" being in turn described as "(a)n administrative function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or otherwise, for the discovery and collection of facts concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the parties to a court case) on the merits of issues raised: x x to pass judgment on: settle judicially: x x act as judge." And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: x x to award or grant judicially in a case of controversy x x."

In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle or decree, or to sentence or condemn. x x. Implies a judicial determination of a fact, and the entry of a judgment." [Italics included. Citations Omitted]

Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or even a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the facts of a controversy is not a judicial function. To be considered as such, the act of receiving evidence

and arriving at factual conclusions in a controversy must be accompanied by the authority of applying the law to the factual conclusions to the end that the controversy may be decided or resolved authoritatively, finally and definitively, subject to appeals or modes of review as may be provided by law.[60] Even respondents themselves admit that the commission is bereft of any quasi-judicial power.[61]

Contrary to petitioners’ apprehension, the PTC will not supplant the Ombudsman or the DOJ or erode their respective powers. If at all, the investigative function of the commission will complement those of the two offices. As pointed out by the Solicitor General, the recommendation to prosecute is but a consequence of the overall task of the commission to conduct a fact-finding investigation.”[62] The actual prosecution of suspected offenders, much less adjudication on the merits of the charges against them,[63] is certainly not a function given to the commission. The phrase, “when in the course of its investigation,” under Section 2(g), highlights this fact and gives credence to a contrary interpretation from that of the petitioners. The function of determining probable cause for the filing of the appropriate complaints before the courts remains to be with the DOJ and the Ombudsman.[64]

At any rate, the Ombudsman’s power to investigate under R.A. No. 6770 is not exclusive but is shared with other similarly authorized government agencies. Thus, in the case of Ombudsman v. Galicia,[65] it was written:

This power of investigation granted to the Ombudsman by the 1987 Constitution and The Ombudsman Act is not exclusive but is shared with other similarly authorized government agencies such as the PCGG and judges of municipal trial courts and municipal circuit trial courts. The power to conduct preliminary investigation on charges against public employees and officials is likewise concurrently shared with the Department of Justice. Despite the passage of the Local Government Code in 1991, the Ombudsman retains concurrent jurisdiction with the Office of the President and the local Sanggunians to investigate complaints against local elective officials. [Emphasis supplied].

Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to investigate criminal cases under Section 15 (1) of R.A. No. 6770, which states:

(1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust,

improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of its primary jurisdiction, it may take over, at any stage, from any investigatory agency of government, the investigation of such cases. [Emphases supplied]

The act of investigation by the Ombudsman as enunciated above contemplates the conduct of a preliminary investigation or the determination of the existence of probable cause. This is categorically out of the PTC’s sphere of functions. Its power to investigate is limited to obtaining facts so that it can advise and guide the President in the performance of his duties relative to the execution and enforcement of the laws of the land. In this regard, the PTC commits no act of usurpation of the Ombudsman’s primordial duties.

The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1, Title III, Book IV in the Revised Administrative Code is by no means exclusive and, thus, can be shared with a body likewise tasked to investigate the commission of crimes.

Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC are to be accorded conclusiveness. Much like its predecessors, the Davide Commission, the Feliciano Commission and the Zenarosa Commission, its findings would, at best, be recommendatory in nature. And being so, the Ombudsman and the DOJ have a wider degree of latitude to decide whether or not to reject the recommendation. These offices, therefore, are not deprived of their mandated duties but will instead be aided by the reports of the PTC for possible indictments for violations of graft laws.

Violation of the Equal Protection Clause

Although the purpose of the Truth Commission falls within the investigative power of the President, the Court finds difficulty in upholding the constitutionality of Executive Order No. 1 in view of its apparent transgression of the equal protection clause enshrined in Section 1, Article III (Bill of Rights) of the 1987 Constitution. Section 1 reads:

Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

The petitioners assail Executive Order No. 1 because it is violative of this constitutional safeguard. They contend that it does not apply equally to all members of the same class such that the intent of singling out the “previous administration” as its sole object makes the PTC an “adventure in partisan hostility.”[66] Thus, in order to be accorded with validity, the commission must also cover reports of graft and corruption in virtually all administrations previous to that of former President Arroyo.[67]

The petitioners argue that the search for truth behind the reported cases of graft and corruption must encompass acts committed not only during the administration of former President Arroyo but also during prior administrations where the “same magnitude of controversies and anomalies”[68] were reported to have been committed against the Filipino people. They assail the classification formulated by the respondents as it does not fall under the recognized exceptions because first, “there is no substantial distinction between the group of officials targeted for investigation by Executive Order No. 1 and other groups or persons who abused their public office for personal gain; and second, the selective classification is not germane to the purpose of Executive Order No. 1 to end corruption.”[69] In order to attain constitutional permission, the petitioners advocate that the commission should deal with “graft and grafters prior and subsequent to the Arroyo administration with the strong arm of the law with equal force.”[70]

Position of respondents

According to respondents, while Executive Order No. 1 identifies the “previous administration” as the initial subject of the investigation, following Section 17 thereof, the PTC will not confine itself to cases of large scale graft and corruption solely during the said administration.[71] Assuming arguendo that the commission would confine its proceedings to officials of the previous administration, the petitioners argue that no offense is committed against the equal protection clause for “the segregation of the transactions of public officers during the previous administration as possible subjects of investigation is a valid classification based on substantial distinctions and is germane to the evils which the Executive Order seeks to correct.”[72] To distinguish the Arroyo administration from past administrations, it recited the following:

First. E.O. No. 1 was issued in view of widespread reports of large scale graft and corruption in the previous administration which have eroded public confidence in public institutions. There is, therefore, an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the people’s faith and confidence in the Government and in their public servants.

Second. The segregation of the preceding administration as the object of fact-finding is warranted by the reality that unlike with administrations long gone, the current administration will most likely bear the immediate consequence of the policies of the previous administration.

Third. The classification of the previous administration as a separate class for investigation lies in the reality that the evidence of possible criminal activity, the evidence that could lead to recovery of public monies illegally dissipated, the policy lessons to be learned to ensure that anti-corruption laws are faithfully executed, are more easily established in the regime that immediately precede the current administration.

Fourth. Many administrations subject the transactions of their predecessors to investigations to provide closure to issues that are pivotal to national life or even as a routine measure of due diligence and good housekeeping by a nascent administration like the Presidential Commission on Good Government (PCGG), created by the late President Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of ill-gotten wealth of her predecessor former President Ferdinand Marcos and his cronies, and the Saguisag Commission created by former President Joseph Estrada under Administrative Order No, 53, to form an ad-hoc and independent citizens’ committee to investigate all the facts and circumstances surrounding “Philippine Centennial projects” of his predecessor, former President Fidel V. Ramos.[73] [Emphases supplied]

Concept of the Equal Protection Clause

One of the basic principles on which this government was founded is that of the equality of right which is embodied in Section 1, Article III of the 1987 Constitution. The equal protection of the laws is embraced in the concept of due process, as every unfair discrimination offends the requirements of justice and fair play. It has been embodied in a separate clause, however, to provide for a more specific guaranty against any form of undue favoritism or hostility from the government. Arbitrariness in general may be challenged on the basis of the due process clause. But if the particular act assailed partakes of an unwarranted partiality or prejudice, the sharper weapon to cut it down is the equal protection clause.[74]

“According to a long line of decisions, equal protection simply requires that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed.”[75]

It “requires public bodies and institutions to treat similarly situated individuals in a similar manner.”[76] “The purpose of the equal protection clause is to secure every person within a state’s jurisdiction against intentional and arbitrary discrimination, whether occasioned by the express terms of a statue or by its improper execution through the state’s duly constituted authorities.”[77] “In other words, the concept of equal justice under the law requires the state to govern impartially, and it may not draw distinctions between individuals solely on differences that are irrelevant to a legitimate governmental objective.”[78]

The equal protection clause is aimed at all official state actions, not just those of the legislature.[79] Its inhibitions cover all the departments of the government including the political and executive departments, and extend to all actions of a state denying equal protection of the laws, through whatever agency or whatever guise is taken. [80]

It, however, does not require the universal application of the laws to all persons or things without distinction. What it simply requires is equality among equals as determined according to a valid classification. Indeed, the equal protection clause permits classification. Such classification, however, to be valid must pass the test of reasonableness. The test has four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing conditions only; and

(4) It applies equally to all members of the same class.[81] “Superficial differences do not make for a valid classification.”[82]

For a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class.[83] “The classification will be regarded as invalid if all the members of the class are not similarly treated, both as to rights conferred and obligations imposed. It is not necessary that the classification be made with absolute symmetry, in the sense that the members of the class should possess the same characteristics in equal degree. Substantial similarity will suffice; and as long as this is achieved, all those covered by the classification are to be treated equally. The mere fact that an individual belonging to a class differs from the other members, as long as that class is substantially distinguishable from all others, does not justify the non-application of the law to him.”[84]

The classification must not be based on existing circumstances only, or so constituted as to preclude addition to the number included in the class. It must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. It must not leave out or “underinclude” those that should otherwise fall into a certain classification. As elucidated in Victoriano v. Elizalde Rope Workers' Union[85] and reiterated in a long line of cases,[86]

The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. [Citations omitted]

Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of the equal protection clause. The clear mandate of the envisioned truth commission is to investigate and find out the truth “concerning the reported cases of graft and corruption during the previous administration”[87] only. The intent to single out the previous administration is plain, patent and manifest. Mention of it has been made in at least three portions of the questioned executive order. Specifically, these are:

WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all;

SECTION 1. Creation of a Commission. – There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the “COMMISSION,” which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees,

their co-principals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor.

SECTION 2. Powers and Functions. – The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. [Emphases supplied]

In this regard, it must be borne in mind that the Arroyo administration is but just a member of a class, that is, a class of past administrations. It is not a class of its own. Not to include past administrations similarly situated constitutes arbitrariness which the equal protection clause cannot sanction. Such discriminating differentiation clearly reverberates to label the commission as a vehicle for vindictiveness and selective retribution.

Though the OSG enumerates several differences between the Arroyo administration and other past administrations, these distinctions are not substantial enough to merit the restriction of the investigation to the “previous administration” only. The reports of widespread corruption in the Arroyo administration cannot be taken as basis for distinguishing said administration from earlier administrations which were also blemished by similar widespread reports of impropriety. They are not inherent in, and do not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it, “Superficial differences do not make for a valid classification.”[88]

The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope of the intended investigation to the previous administration only. The OSG ventures to opine that “to include other past administrations, at this point, may unnecessarily overburden the commission and lead it to lose its effectiveness.”[89] The reason given is specious. It is without doubt irrelevant to the legitimate and noble objective of the PTC to stamp out or “end corruption and the evil it breeds.”[90]

The probability that there would be difficulty in unearthing evidence or that the earlier reports involving the earlier administrations were already inquired into is beside the point. Obviously, deceased

presidents and cases which have already prescribed can no longer be the subjects of inquiry by the PTC. Neither is the PTC expected to conduct simultaneous investigations of previous administrations, given the body’s limited time and resources. “The law does not require the impossible” (Lex non cogit ad impossibilia).[91]

Given the foregoing physical and legal impossibility, the Court logically recognizes the unfeasibility of investigating almost a century’s worth of graft cases. However, the fact remains that Executive Order No. 1 suffers from arbitrary classification. The PTC, to be true to its mandate of searching for the truth, must not exclude the other past administrations. The PTC must, at least, have the authority to investigate all past administrations. While reasonable prioritization is permitted, it should not be arbitrary lest it be struck down for being unconstitutional. In the often quoted language of Yick Wo v. Hopkins,[92]

Though the law itself be fair on its face and impartial in appearance, yet, if applied and administered by public authority with an evil eye and an unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the constitution. [Emphasis supplied]

It could be argued that considering that the PTC is an ad hoc body, its scope is limited. The Court, however, is of the considered view that although its focus is restricted, the constitutional guarantee of equal protection under the laws should not in any way be circumvented. The Constitution is the fundamental and paramount law of the nation to which all other laws must conform and in accordance with which all private rights determined and all public authority administered.[93] Laws that do not conform to the Constitution should be stricken down for being unconstitutional.[94] While the thrust of the PTC is specific, that is, for investigation of acts of graft and corruption, Executive Order No. 1, to survive, must be read together with the provisions of the Constitution. To exclude the earlier administrations in the guise of “substantial distinctions” would only confirm the petitioners’ lament that the subject executive order is only an “adventure in partisan hostility.” In the case of US v. Cyprian,[95] it was written: “A rather limited number of such classifications have routinely been held or assumed to be arbitrary; those include: race, national origin, gender, political activity or membership in a political party, union activity or membership in a labor union, or more generally the exercise of first amendment rights.”

To reiterate, in order for a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class.[96] “Such a classification must not be based on existing circumstances only, or so constituted as to preclude additions to the number included within a class, but must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. Furthermore, all who are in situations and circumstances which are relative to the discriminatory legislation and which are indistinguishable from those of the members of the class must be brought under the influence of the law and treated by it in the same way as are the members of the class.”[97]

The Court is not unaware that “mere underinclusiveness is not fatal to the validity of a law under the equal protection clause.”[98] “Legislation is not unconstitutional merely because it is not all-embracing and does not include all the evils within its reach.”[99] It has been written that a regulation challenged under the equal protection clause is not devoid of a rational predicate simply because it happens to be incomplete.[100] In several instances, the underinclusiveness was not considered a valid reason to strike down a law or regulation where the purpose can be attained in future legislations or regulations. These cases refer to the “step by step” process.[101] “With regard to equal protection claims, a legislature does not run the risk of losing the entire remedial scheme simply because it fails, through inadvertence or otherwise, to cover every evil that might conceivably have been attacked.”[102]

In Executive Order No. 1, however, there is no inadvertence. That the previous administration was picked out was deliberate and intentional as can be gleaned from the fact that it was underscored at least three times in the assailed executive order. It must be noted that Executive Order No. 1 does not even mention any particular act, event or report to be focused on unlike the investigative commissions created in the past. “The equal protection clause is violated by purposeful and intentional discrimination.”[103]

To disprove petitioners’ contention that there is deliberate discrimination, the OSG clarifies that the commission does not only confine itself to cases of large scale graft and corruption committed during the previous administration.[104] The OSG points to Section 17 of Executive Order No. 1, which provides:

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

The Court is not convinced. Although Section 17 allows the President the discretion to expand the scope of investigations of the PTC so as to include the acts of graft and corruption committed in other past administrations, it does not guarantee that they would be covered in the future. Such expanded mandate of the commission will still depend on the whim and caprice of the President. If he would decide not to include them, the section would then be meaningless. This will only fortify the fears of the petitioners that the Executive Order No. 1 was “crafted to tailor-fit the prosecution of officials and personalities of the Arroyo administration.”[105]

The Court tried to seek guidance from the pronouncement in the case of Virata v. Sandiganbayan,[106] that the “PCGG Charter (composed of Executive Orders Nos. 1, 2 and 14) does not violate the equal protection clause.” The decision, however, was devoid of any discussion on how such conclusory statement was arrived at, the principal issue in said case being only the sufficiency of a cause of action.

A final word

The issue that seems to take center stage at present is - whether or not the Supreme Court, in the exercise of its constitutionally mandated power of Judicial Review with respect to recent initiatives of the legislature and the executive department, is exercising undue interference. Is the Highest Tribunal, which is expected to be the protector of the Constitution, itself guilty of violating fundamental tenets like the doctrine of separation of powers? Time and again, this issue has been addressed by the Court, but it seems that the present political situation calls for it to once again explain the legal basis of its action lest it continually be accused of being a hindrance to the nation’s thrust to progress.

The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987 Constitution, is vested with Judicial Power that “includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave of abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.”

Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review which is the power to declare a treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation unconstitutional. This power also includes the duty to rule on the constitutionality of the application, or operation of presidential decrees, proclamations, orders, instructions, ordinances, and other regulations. These provisions, however, have been fertile grounds of conflict between the Supreme Court, on one hand, and the two co-equal bodies of government, on the other. Many times the Court has been accused of asserting superiority over the other departments.

To answer this accusation, the words of Justice Laurel would be a good source of enlightenment, to wit: “And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them.”[107]

Thus, the Court, in exercising its power of judicial review, is not imposing its own will upon a co-equal body but rather simply making sure that any act of government is done in consonance with the authorities and rights allocated to it by the Constitution. And, if after said review, the Court finds no constitutional violations of any sort, then, it has no more authority of proscribing the actions under review. Otherwise, the Court will not be deterred to pronounce said act as void and unconstitutional.

It cannot be denied that most government actions are inspired with noble intentions, all geared towards the betterment of the nation and its people. But then again, it is important to remember this ethical principle: “The end does not justify the means.” No matter how noble and worthy of admiration the purpose of an act, but if the means to be employed in accomplishing it is simply irreconcilable with constitutional parameters, then it cannot still be allowed.[108] The Court cannot just turn a blind eye and simply let it pass. It will continue to uphold the Constitution and its enshrined principles.

“The Constitution must ever remain supreme. All must bow to the mandate of this law. Expediency must not be allowed to sap its strength nor greed for power debase its rectitude.”[109]

Lest it be misunderstood, this is not the death knell for a truth commission as nobly envisioned by the present administration. Perhaps a revision of the executive issuance so as to include the earlier past

administrations would allow it to pass the test of reasonableness and not be an affront to the Constitution. Of all the branches of the government, it is the judiciary which is the most interested in knowing the truth and so it will not allow itself to be a hindrance or obstacle to its attainment. It must, however, be emphasized that the search for the truth must be within constitutional bounds for “ours is still a government of laws and not of men.”[110]

WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby declared UNCONSTITUTIONAL insofar as it is violative of the equal protection clause of the Constitution.

As also prayed for, the respondents are hereby ordered to cease and desist from carrying out the provisions of Executive Order No. 1.

SO ORDERED.

KAPISANAN NG MGA KAWANI NG ENERGY REGULATORY BOARD v. COMMISSIONER FE B. BARIN

G.R. No. 150974

June 29, 2007

The Case

This is a special civil action for certiorari and prohibition[1] of the selection and appointment of employees of the Energy Regulatory Commission (ERC) by the ERC Board of Commissioners.

Petitioner Kapisanan ng mga Kawani ng Energy Regulatory Board (KERB) seeks to declare Section 38 of Republic Act No. 9136 (RA 9136), which abolished the Energy Regulatory Board (ERB) and created the ERC, as unconstitutional and to prohibit the ERC Commissioners from filling up the ERC’s plantilla.

The Facts

RA 9136, popularly known as EPIRA (for Electric Power Industry Reform Act of 2001), was enacted on 8 June 2001 and took effect on 26 June 2001. Section 38 of RA 9136 provides for the abolition of the ERB and the creation of the ERC. The pertinent portions of Section 38 read:

Creation of the Energy Regulatory Commission. — There is hereby created an independent, quasi-judicial regulatory board to be named the Energy Regulatory Commission (ERC). For this purpose, the existing Energy Regulatory Board (ERB) created under Executive Order No. 172, as amended, is hereby abolished.

The Commission shall be composed of a Chairman and four (4) members to be appointed by the President of the Philippines. x x x

Within three (3) months from the creation of the ERC, the Chairman shall submit for the approval of the President of the Philippines the new organizational structure and plantilla positions necessary to carry out the powers and functions of the ERC.

x x x x

The Chairman and members of the Commission shall assume office at the beginning of their terms: Provided, That, if upon the effectivity of this Act, the Commission has not been constituted and the new staffing pattern and plantilla positions have not been approved and filled-up, the current Board and existing personnel of ERB shall continue to hold office.

The existing personnel of the ERB, if qualified, shall be given preference in the filling up of plantilla positions created in the ERC, subject to existing civil service rules and regulations.

At the time of the filing of this petition, the ERC was composed of Commissioner Fe B. Barin and Deputy Commissioners Carlos R. Alindada, Leticia V. Ibay, Oliver B. Butalid, and Mary Anne B. Colayco

(collectively, Commissioners). The Commissioners assumed office on 15 August 2001. Pursuant to Section 38 of RA 9136, the Commissioners issued the proposed Table of Organization, Staffing Pattern, and Salary Structure on 25 September 2001 which the President of the Philippines approved on 13 November 2001. Meanwhile, KERB submitted to the Commissioners its Resolution No. 2001-02 on 13 September 2001. Resolution No. 2001-02 requested the Commissioners for an opportunity to be informed on the proposed plantilla positions with their equivalent qualification standards.

On 17 October 2001, the Commissioners issued the guidelines for the selection and hiring of ERC employees. A portion of the guidelines reflects the Commissioners’ view on the selection and hiring of the ERC employees vis-a-vis Civil Service rules, thus:

Since R.A. 9136 has abolished the Energy Regulatory Board (ERB), it is the view of the Commission that the provisions of Republic Act No. 6656 (An Act to Protect the Security of [Tenure of] Civil Service Officers and Employees in the Implementation of Government Reorganization) will not directly apply to ERC’s current efforts to establish a new organization. Civil Service laws, rules and regulations, however, will have suppletory application to the extent possible in regard to the selection and placement of employees in the ERC.[2] (Emphasis supplied)

On 5 November 2005, KERB sent a letter to the Commissioners stating the KERB members’ objection to the Commissioners’ stand that Civil Service laws, rules and regulations have suppletory application in the selection and placement of the ERC employees. KERB asserted that RA 9136 did not abolish the ERB or change the ERB’s character as an economic regulator of the electric power industry. KERB insisted that RA 9136 merely changed the ERB’s name to the ERC and expanded the ERB’s functions and objectives. KERB sent the Commissioners yet another letter on 13 November 2001. KERB made a number of requests: (1) the issuance of a formal letter related to the date of filing of job applications, including the use of Civil Service application form no. 212; (2) the creation of a placement/recruitment committee and setting guidelines relative to its functions, without prejudice to existing Civil Service rules and regulations; and (3) copies of the plantilla positions and their corresponding qualification standards duly approved by either the President of the Philippines or the Civil Service Commission (CSC).

Commissioner Barin replied to KERB’s letter on 15 November 2001. She stated that Civil Service application form no. 212 and the ERC-prescribed application format are substantially the same. Furthermore, the creation of a placement/recruitment committee is no longer necessary because there is already a prescribed set of guidelines for the recruitment of personnel. The ERC hired an independent

consultant to administer the necessary tests for the technical and managerial levels. Finally, the ERC already posted the plantilla positions, which prescribe higher standards, as approved by the Department of Budget and Management. Commissioner Barin stated that positions in the ERC do not need the prior approval of the CSC, as the ERC is only required to submit the qualification standards to the CSC.

On 5 December 2001, the ERC published a classified advertisement in the Philippine Star. Two days later, the CSC received a list of vacancies and qualification standards from the ERC. The ERC formed a Selection Committee to process all applications.

KERB, fearful of the uncertainty of the employment status of its members, filed the present petition on 20 December 2001. KERB later filed an Urgent Ex Parte Motion to Enjoin Termination of Petitioner ERB Employees on 2 January 2002. However, before the ERC received KERB’s pleadings, the Selection Committee already presented its list of proposed appointees to the Commissioners.

In their Comment, the Commissioners describe the status of the ERB employees’ appointment in the ERC as follows:

As of February 1, 2002, of the two hundred twelve (212) ERB employees, one hundred thirty eighty [sic] (138) were rehired and appointed to ERC plantilla positions and sixty six (66) opted to retire or be separated from the service. Those who were rehired and those who opted to retire or be separated constituted about ninety six (96%) percent of the entire ERB employees. The list of the ERB employees appointed to new positions in the ERC is attached hereto as Annex 1. Only eight (8) ERB employees could not be appointed to new positions due to the reduction of the ERC plantilla and the absence of positions appropriate to their respective qualifications and skills. The appropriate notice was issued to each of them informing them of their separation from the service and assuring them of their entitlement to “separation pay and other benefits in accordance with existing laws.”[3]

The Issues

KERB raises the following issues before this Court:

1. Whether Section 38 of RA 9136 abolishing the ERB is constitutional; and

2. Whether the Commissioners of the ERC were correct in disregarding and considering merely suppletory in character the protective mantle of RA 6656 as to the ERB employees or petitioner in this case.[4]

The Ruling of the Court

The petition has no merit.

We disregard the procedural defects in the petition, such as KERB’s personality to file the petition on behalf of its alleged members and Elmar Agir’s authority to institute the action, because of the demands of public interest.[5]

Constitutionality of the ERB’s Abolition

and the ERC’s Creation

All laws enjoy the presumption of constitutionality. To justify the nullification of a law, there must be a clear and unequivocal breach of the Constitution. KERB failed to show any breach of the Constitution.

A public office is created by the Constitution or by law or by an officer or tribunal to which the power to create the office has been delegated by the legislature.[6] The power to create an office carries with it the power to abolish. President Corazon C. Aquino, then exercising her legislative powers, created the ERB by issuing Executive Order No. 172 on 8 May 1987.

The question of whether a law abolishes an office is a question of legislative intent. There should not be any controversy if there is an explicit declaration of abolition in the law itself.[7] Section 38 of RA 9136 explicitly abolished the ERB. However, abolition of an office and its related positions is different

from removal of an incumbent from his office. Abolition and removal are mutually exclusive concepts. From a legal standpoint, there is no occupant in an abolished office. Where there is no occupant, there is no tenure to speak of. Thus, impairment of the constitutional guarantee of security of tenure does not arise in the abolition of an office. On the other hand, removal implies that the office and its related positions subsist and that the occupants are merely separated from their positions.[8]

A valid order of abolition must not only come from a legitimate body, it must also be made in good faith. An abolition is made in good faith when it is not made for political or personal reasons, or when it does not circumvent the constitutional security of tenure of civil service employees.[9] Abolition of an office may be brought about by reasons of economy, or to remove redundancy of functions, or a clear and explicit constitutional mandate for such termination of employment.[10] Where one office is abolished and replaced with another office vested with similar functions, the abolition is a legal nullity.[11] When there is a void abolition, the incumbent is deemed to have never ceased holding office.

KERB asserts that there was no valid abolition of the ERB but there was merely a reorganization done in bad faith. Evidences of bad faith are enumerated in Section 2 of Republic Act No. 6656 (RA 6656),[12] Section 2 of RA 6656 reads:

No officer or employee in the career service shall be removed except for a valid cause and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil Service Law. The existence of any or some of the following circumstances may be considered as evidence of bad faith in the removals made as a result of reorganization, giving rise to a claim for reinstatement or reappointment by an aggrieved party:

(a) Where there is a significant increase in the number of positions in the new staffing pattern of the department or agency concerned;

(b) Where an office is abolished and another performing substantially the same functions is created;

(c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance and merit;

(d) Where there is a reclassification of offices in the department or agency concerned and the reclassified offices perform substantially the same function as the original offices;

(e) Where the removal violates the order of separation provided in Section 3 hereof.

KERB claims that the present case falls under the situation described in Section 2(b) of RA 6656. We thus need to compare the provisions enumerating the powers and functions of the ERB and the ERC to see whether they have substantially the same functions. Under Executive Order No. 172, the ERB has the following powers and functions:

SEC. 3. Jurisdiction, Powers and Functions of the Board. ― When warranted and only when public necessity requires, the Board may regulate the business of importing, exporting, re-exporting, shipping, transporting, processing, refining, marketing and distributing energy resources. Energy resource means any substance or phenomenon which by itself or in combination with others, or after processing or refining or the application to it of technology, emanates, generates or causes the emanation or generation of energy, such as but not limited to, petroleum or petroleum products, coal, marsh gas, methane gas, geothermal and hydroelectric sources of energy, uranium and other similar radioactive minerals, solar energy, tidal power, as well as non-conventional existing and potential sources.

The Board shall, upon proper notice and hearing, exercise the following, among other powers and functions:

(a) Fix and regulate the prices of petroleum products;

(b) Fix and regulate the rate schedule or prices of piped gas to be charged by duly franchised gas companies which distribute gas by means of underground pipe system;

(c) Fix and regulate the rates of pipeline concessionaires under the provisions of Republic Act No. 387, as amended, otherwise known as the “Petroleum Act of 1949,” as amended by Presidential Decree No. 1700;

(d) Regulate the capacities of new refineries or additional capacities of existing refineries and license refineries that may be organized after the issuance of this Executive Order, under such terms and conditions as are consistent with the national interest;

(e) Whenever the Board has determined that there is a shortage of any petroleum product, or when public interest so requires, it may take such steps as it may consider necessary, including the temporary adjustment of the levels of prices of petroleum products and the payment to the Oil Price Stabilization Fund created under Presidential Decree No. 1956 by persons or entities engaged in the petroleum industry of such amounts as may be determined by the Board, which will enable the importer to recover its cost of importation.

SEC. 4. Reorganized or Abolished Agency. ― (a) The Board of Energy is hereby reconstituted into the Energy Regulatory Board, and the former’s powers and functions under Republic Act No. 6173, as amended by Presidential Decree No. 1208, as amended, are transferred to the latter.

(b) The regulatory and adjudicatory powers and functions exercised by the Bureau of Energy Utilization under Presidential Decree No. 1206, as amended, are transferred to the Board, the provisions of Executive Order No. 131 notwithstanding.

SEC. 5. Other Transferred Powers and Functions. ― The power of the Land Transportation Commission to determine, fix and/or prescribe rates or charges pertaining to the hauling of petroleum products are transferred to the Board. The power to fix and regulate the rates or charges pertinent to shipping or transporting of petroleum products shall also be exercised by the Board.

The foregoing transfer of powers and functions shall include applicable funds and appropriations, records, equipment, property and such personnel as may be necessary; Provided, That with reference to paragraph (b) of Section 4 hereof, only such amount of funds and appropriations of the Bureau of Energy Utilization, as well as only the personnel thereof who are completely or primarily involved in the exercise by said Bureau of its regulatory and adjudicatory powers and functions, shall be affected by such transfer: Provided, further, That the funds and appropriations as well as the records, equipment,

property and all personnel of the reorganized Board of Energy shall be transferred to the Energy Regulatory Board.

SEC. 6. Power to Promulgate Rules and Perform Other Acts. ― The Board shall have the power to promulgate rules and regulations relevant to procedures governing hearings before it and enforce compliance with any rule, regulation, order or other requirements: Provided, That said rules and regulations shall take effect fifteen (15) days after publication in the Official Gazette. It shall also perform such other acts as may be necessary or conducive to the exercise of its powers and functions, and the attainment of the purposes of this Order.

On the other hand, Section 43 of RA 9136 enumerates the basic functions of the ERC.

SEC. 43. Functions of the ERC. ― The ERC shall promote competition, encourage market development, ensure customer choice and discourage/penalize abuse of market power in the restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing. Towards this end, it shall be responsible for the following key functions in the restructured industry:

(a) Enforce the implementing rules and regulations of this Act;

(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in accordance with law, a National Grid Code and a Distribution Code which shall include, but not limited to, the following:

(i) Performance standards for TRANSCO O & M Concessionaire, distribution utilities and suppliers: Provided, That in the establishment of the performance standards, the nature and function of the entities shall be considered; and

(ii) Financial capability standards for the generating companies, the TRANSCO, distribution utilities and suppliers: Provided, That in the formulation of the financial capability standards, the nature and function of the entity shall be considered: Provided, further, That such standards are set to ensure that the electric power industry participants meet the minimum financial standards to protect the public interest. Determine, fix, and approve, after due notice and public hearings the universal charge, to be imposed on all electricity end-users pursuant to Section 34 hereof;

(c) Enforce the rules and regulations governing the operations of the electricity spot market and the activities of the spot market operator and other participants in the spot market, for the purpose of ensuring a greater supply and rational pricing of electricity;

(d) Determine the level of cross subsidies in the existing retail rate until the same is removed pursuant to Section 73 hereof;

(e) Amend or revoke, after due notice and hearing, the authority to operate of any person or entity which fails to comply with the provisions hereof, the IRR or any order or resolution of the ERC. In the event a divestment is required, the ERC shall allow the affected party sufficient time to remedy the infraction or for an orderly disposal, but shall in no case exceed twelve (12) months from the issuance of the order;

(f) In the public interest, establish and enforce a methodology for setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency of the regulated entities. The rates must be such as to allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to enable the entity to operate viably. The ERC may adopt alternative forms of internationally-accepted rate setting methodology as it may deem appropriate. The rate-setting methodology so adopted and applied must ensure a reasonable price of electricity. The rates prescribed shall be non-discriminatory. To achieve this objective and to ensure the complete removal of cross subsidies, the cap on the recoverable rate of system losses prescribed in Section 10 of Republic Act No. 7832, is hereby amended and shall be replaced by caps which shall be determined by the ERC based on load density, sales mix, cost of service, delivery voltage and other technical considerations it may promulgate. The ERC shall determine such form of rate-setting methodology, which shall promote efficiency. In case the rate setting methodology used is RORB, it shall be subject to the following guidelines:

(i) For purposes of determining the rate base, the TRANSCO or any distribution utility may be allowed to revalue its eligible assets not more than once every three (3) years by an independent appraisal company: Provided, however, That ERC may give an exemption in case of unusual devaluation: Provided, further, That the ERC shall exert efforts to minimize price shocks in order to protect the consumers;

(ii) Interest expenses are not allowable deductions from permissible return on rate base;

(iii) In determining eligible cost of services that will be passed on to the end-users, the ERC shall establish minimum efficiency performance standards for the TRANSCO and distribution utilities including systems losses, interruption frequency rates, and collection efficiency;

(iv) Further, in determining rate base, the TRANSCO or any distribution utility shall not be allowed to include management inefficiencies like cost of project delays not excused by force majeure, penalties and related interest during construction applicable to these unexcused delays; and

(v) Any significant operating costs or project investments of TRANSCO and distribution utilities which shall become part of the rate base shall be subject to the verification of the ERC to ensure that the contracting and procurement of the equipment, assets and services have been subjected to transparent and accepted industry procurement and purchasing practices to protect the public interest.

(g) Three (3) years after the imposition of the universal charge, ensure that the charges of the TRANSCO or any distribution utility shall bear no cross subsidies between grids, within grids, or between classes of customers, except as provided herein;

(h) Review and approve any changes on the terms and conditions of service of the TRANSCO or any distribution utility;

(i) Allow the TRANSCO to charge user fees for ancillary services to all electric power industry participants or self-generating entities connected to the grid. Such fees shall be fixed by the ERC after due notice and public hearing;

(j) Set a lifeline rate for the marginalized end-users;

(k) Monitor and take measures in accordance with this Act to penalize abuse of market power, cartelization, and anti-competitive or discriminatory behavior by any electric power industry participant;

(l) Impose fines or penalties for any non-compliance with or breach of this Act, the IRR of this Act and the rules and regulations which it promulgates or administers;

(m) Take any other action delegated to it pursuant to this Act;

(n) Before the end of April of each year, submit to the Office of the President of the Philippines and Congress, copy furnished the DOE, an annual report containing such matters or cases which have been filed before or referred to it during the preceding year, the actions and proceedings undertaken and its decision or resolution in each case. The ERC shall make copies of such reports available to any interested party upon payment of a charge which reflects the printing costs. The ERC shall publish all its decisions involving rates and anticompetitive cases in at least one (1) newspaper of general circulation, and/or post electronically and circulate to all interested electric power industry participants copies of its resolutions to ensure fair and impartial treatment;

(o) Monitor the activities of the generation and supply of the electric power industry with the end in view of promoting free market competition and ensuring that the allocation or pass through of bulk purchase cost by distributors is transparent, non-discriminatory and that any existing subsidies shall be divided pro rata among all retail suppliers;

(p) Act on applications for or modifications of certificates of public convenience and/or necessity, licenses or permits of franchised electric utilities in accordance with law and revoke, review and modify such certificates, licenses or permits in appropriate cases, such as in cases of violations of the Grid Code, Distribution Code and other rules and regulations issued by the ERC in accordance with law;

(q) Act on applications for cost recovery and return on demand side management projects;

(r) In the exercise of its investigative and quasi-judicial powers, act against any participant or player in the energy sector for violations of any law, rule and regulation governing the same, including the rules on cross ownership, anticompetitive practices, abuse of market positions and similar or related acts by any participant in the energy sector, or by any person as may be provided by law, and require any person or entity to submit any report or data relative to any investigation or hearing conducted pursuant to this Act;

(s) Inspect, on its own or through duly authorized representatives, the premises, books of accounts and records of any person or entity at any time, in the exercise of its quasi-judicial power for purposes of determining the existence of any anticompetitive behavior and/or market power abuse and any violation of rules and regulations issued by the ERC;

(t) Perform such other regulatory functions as are appropriate and necessary in order to ensure the successful restructuring and modernization of the electric power industry, such as, but not limited to, the rules and guidelines under which generation companies, distribution utilities which are not publicly listed shall offer and sell to the public a portion not less than fifteen percent (15%) of their common shares of stocks: Provided, however, That generation companies, distribution utilities or their respective holding companies that are already listed in the PSE are deemed in compliance. For existing companies, such public offering shall be implemented not later than five (5) years from the effectivity of this Act. New companies shall implement their respective public offerings not later than five (5) years from the issuance of their certificate of compliance; and

(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the exercise of the abovementioned powers, functions and responsibilities and over all cases involving disputes between and among participants or players in the energy sector.

All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be published at least twice for two successive weeks in two (2) newspapers of nationwide circulation.

Aside from Section 43, additional functions of the ERC are scattered throughout RA 9136:

1. SEC. 6. Generation Sector. ― Generation of electric power, a business affected with public interest, shall be competitive and open.

Upon the effectivity of this Act, any new generation company shall, before it operates, secure from the Energy Regulatory Commission (ERC) a certificate of compliance pursuant to the standards set forth in this Act, as well as health, safety and environmental clearances from the appropriate government agencies under existing laws.

x x x x

2. SEC. 8. Creation of the National Transmission Company. ― x x x

That the subtransmission assets shall be operated and maintained by TRANSCO until their disposal to qualified distribution utilities which are in a position to take over the responsibility for operating, maintaining, upgrading, and expanding said assets. x x x

In case of disagreement in valuation, procedures, ownership participation and other issues, the ERC shall resolve such issues.

x x x x

3. SEC. 23. Functions of Distribution Utilities. ― x x x

Distribution utilities shall submit to the ERC a statement of their compliance with the technical specifications prescribed in the Distribution Code and the performance standards prescribed in the IRR of this Act. Distribution utilities which do not comply with any of the prescribed technical specifications and performance standards shall submit to the ERC a plan to comply, within three (3) years, with said prescribed technical specifications and performance standards. The ERC shall, within sixty (60) days upon receipt of such plan, evaluate the same and notify the distribution utility concerned of its action. Failure to submit a feasible and credible plan and/or failure to implement the same shall serve as grounds for the imposition of appropriate sanctions, fines or penalties.

x x x x

4. SEC. 28. De-monopolization and Shareholding Dispersal. ― In compliance with the constitutional mandate for dispersal of ownership and de-monopolization of public utilities, the holdings of persons, natural or juridical, including directors, officers, stockholders and related interests, in a distribution utility and their respective holding companies shall not exceed twenty-five (25%) percent of the voting shares of stock unless the utility or the company holding the shares or its controlling stockholders are already listed in the Philippine Stock Exchange (PSE): Provided, That controlling stockholders of small distribution utilities are hereby required to list in the PSE within five (5) years from the enactment of this Act if they already own the stocks. New controlling stockholders shall undertake such listing within five (5) years from the time they acquire ownership and control. A small distribution company is one whose peak demand is equal to Ten megawatts (10MW).

The ERC shall, within sixty (60) days from the effectivity of this Act, promulgate the rules and regulations to implement and effect this provision.

x x x x

5. SEC. 29. Supply Sector. ― x x x all suppliers of electricity to the contestable market shall require a license from the ERC.

For this purpose, the ERC shall promulgate rules and regulations prescribing the qualifications of electricity suppliers which shall include, among other requirements, a demonstration of their technical

capability, financial capability, and creditworthiness: Provided, That the ERC shall have authority to require electricity suppliers to furnish a bond or other evidence of the ability of a supplier to withstand market disturbances or other events that may increase the cost of providing service.

x x x x

6. SEC. 30. Wholesale Electricity Spot Market. ― x x x

Subject to the compliance with the membership criteria, all generating companies, distribution utilities, suppliers, bulk consumers/end-users and other similar entities authorized by the ERC shall be eligible to become members of the wholesale electricity spot market.

The ERC may authorize other similar entities to become eligible as members, either directly or indirectly, of the wholesale electricity spot market.

x x x x

7. SEC. 31. Retail Competition and Open Access. ― x x x

Upon the initial implementation of open access, the ERC shall allow all electricity end-users with a monthly average peak demand of at least one megawatt (1MW) for the preceding twelve (12) months to be the contestable market. xxx Subsequently and every year thereafter, the ERC shall evaluate the performance of the market. x x x

8. SEC. 32. NPC Stranded Debt and Contract Cost Recovery. ― x x x

The ERC shall verify the reasonable amounts and determine the manner and duration for the full recovery of stranded debt and stranded contract costs as defined herein x x x x

9. SEC. 34. Universal Charge. ― Within one (1) year from the effectivity of this Act, a universal charge to be determined, fixed and approved by the ERC, shall be imposed on all electricity end-users x x x x

10. SEC. 35. Royalties, Returns and Tax Rates for Indigenous Energy Resources. ― x x x

To ensure lower rates for end-users, the ERC shall forthwith reduce the rates of power from all indigenous sources of energy.

11. SEC. 36. Unbundling of Rates and Functions. ― x x x

each distribution utility shall file its revised rates for the approval by the ERC. x x x x

12. SEC. 40. Enhancement of Technical Competence. ― The ERC shall establish rigorous training programs for its staff for the purpose of enhancing the technical competence of the ERC in the following areas: evaluation of technical performance and monitoring of compliance with service and performance standards, performance-based rate-setting reform, environmental standards and such other areas as will enable the ERC to adequately perform its duties and functions.

13. SEC. 41. Promotion of Consumer Interests. ― The ERC shall handle consumer complaints and ensure the adequate promotion of consumer interests.

14. SEC. 45. Cross Ownership, Market Power Abuse and Anti-Competitive Behavior. ― No participant in the electricity industry may engage in any anti-competitive behavior including, but not limited to, cross-subsidization, price or market manipulation, or other unfair trade practices detrimental to the encouragement and protection of contestable markets.

x x x x

(c) x x x The ERC shall, within one (1) year from the effectivity of this Act, promulgate rules and regulations to promote competition, encourage market development and customer choice and

discourage/penalize abuse of market power, cartelization and any anticompetitive or discriminatory behavior, in order to further the intent of this Act and protect the public interest. Such rules and regulations shall define the following:

(a) the relevant markets for purposes of establishing abuse or misuse of monopoly or market position;

(b) areas of isolated grids; and

(c) the periodic reportorial requirements of electric power industry participants as may be necessary to enforce the provisions of this Section.

The ERC shall, motu proprio, monitor and penalize any market power abuse or anticompetitive or discriminatory act or behavior by any participant in the electric power industry.

15. SEC. 51. Powers. ― The PSALM Corp. shall, in the performance of its functions and for the attainment of its objective, have the following powers: x x x

(e) To liquidate the NPC stranded contract costs utilizing proceeds from sales and other property contributed to it, including the proceeds from the universal charge;

x x x x

16. SEC. 60. Debts of Electric Cooperatives. ― x x x The ERC shall ensure a reduction in the rates of electric cooperatives commensurate with the resulting savings due to the removal of the amortization payments of their loans. x x x x

17. SEC. 62. Joint Congressional Power Commission. ― x x x

x x x the Power Commission is hereby empowered to require the DOE, ERC, NEA, TRANSCO, generation companies, distribution utilities, suppliers and other electric power industry participants to submit reports and all pertinent data and information relating to the performance of their respective functions in the industry. xxx

x x x x

18. SEC. 65. Environmental Protection. ― Participants in the generation, distribution and transmission sub-sectors of the industry shall comply with all environmental laws, rules, regulations and standards promulgated by the Department of Environment and Natural Resources including, in appropriate cases, the establishment of an environmental guarantee fund.

19. SEC. 67. NPC Offer of Transition Supply Contracts. ― Within six (6) months from the effectivity of this Act, NPC shall file with the ERC for its approval a transition supply contract duly negotiated with the distribution utilities containing the terms and conditions of supply and a corresponding schedule of rates, consistent with the provisions hereof, including adjustments and/or indexation formulas which shall apply to the term of such contracts.

x x x x

20. SEC. 69. Renegotiation of Power Purchase and Energy Conversion Agreements between Government Entities. ― Within three (3) months from the effectivity of this Act, all power purchase and energy conversion agreements between the PNOC-Energy Development Corporation (PNOC-EDC) and NPC, including but not limited to the Palimpinon, Tongonan and Mt. Apo Geothermal complexes, shall be reviewed by the ERC and the terms thereof amended to remove any hidden costs or extraordinary mark-ups in the cost of power or steam above their true costs. All amended contracts shall be submitted to the Joint Congressional Power Commission for approval. The ERC shall ensure that all savings realized from the reduction of said mark-ups shall be passed on to all end-users.

After comparing the functions of the ERB and the ERC, we find that the ERC indeed assumed the functions of the ERB. However, the overlap in the functions of the ERB and of the ERC does not mean that there is no valid abolition of the ERB. The ERC has new and expanded functions which are intended to meet the specific needs of a deregulated power industry. Indeed, National Land Titles and Deeds Registration Administration v. Civil Service Commission stated that:

[I]f the newly created office has substantially new, different or additional functions, duties or powers, so that it may be said in fact to create an office different from the one abolished, even though it embraces all or some of the duties of the old office it will be considered as an abolition of one office and the creation of a new or different one. The same is true if one office is abolished and its duties, for reasons of economy are given to an existing officer or office.[13]

KERB argues that “RA 9136 did not abolish the ERB nor did it alter its essential character as an economic regulator of the electric power industry. x x x RA 9136 rather changed merely ERB’s name and title to that of the ERC even as it expanded its functions and objectives to keep pace with the times.” To uphold KERB’s argument regarding the invalidity of the ERB’s abolition is to ignore the developments in the history of energy regulation.

The regulation of public services started way back in 1902 with the enactment of Act No. 520 which created the Coastwise Rate Commission. In 1906, Act No. 1507 was passed creating the Supervising Railway Expert. The following year, Act No. 1779 was enacted creating the Board of Rate Regulation. Then, Act No 2307, which was patterned after the Public Service Law of the State of New Jersey, was approved by the Philippine Commission in 1914, creating the Board of Public Utility Commissioners, composed of three members, which absorbed all the functions of the Coastwise Rate Commission, the Supervising Railway Expert, and the Board of Rate Regulation.

Thereafter, several laws were enacted on public utility regulation. On November 7, 1936, Commonwealth Act No. 146, otherwise known as the Public Service Law, was enacted by the National Assembly. The Public Service Commission (PSC) had jurisdiction, supervision, and control over all public services, including the electric power service.

After almost four decades, significant developments in the energy sector changed the landscape of economic regulation in the country.

· April 30, 1971 ― R.A. No. 6173 was passed creating the Oil Industry Commission (OIC), which was tasked to regulate the oil industry and to ensure the adequate supply of petroleum products at reasonable prices.

· September 24, 1972 ― then President Ferdinand E. Marcos issued Presidential Decree No. 1 which ordered the preparation of the Integrated Reorganization Plan by the Commission on Reorganization. The Plan abolished the PSC and transferred the regulatory and adjudicatory functions pertaining to the electricity industry and water resources to then Board of Power and Waterworks (BOPW).

· October 6, 1977 ― the government created the Department of Energy (DOE) and consequently abolished the OIC, which was replaced by the creation of the Board of Energy (BOE) through Presidential Decree No. 1206. The BOE, in addition, assumed the powers and functions of the BOPW over the electric power industry.

· May 8, 1987 ― the BOE was reconstituted into the Energy Regulatory Board (ERB), pursuant to Executive Order No. 172 issued by then President Corazon C. Aquino as part of her government’s reorganization program. The rationale was to consolidate and entrust into a single body all the regulatory and adjudicatory functions pertaining to the energy sector. Thus, the power to regulate the power rates and services of private electric utilities was transferred to the ERB.

· December 28, 1992 ― Republic Act No. 7638 signed, where the power to fix the rates of the National Power Corporation (NPC) and the rural electric cooperatives (RECs) was passed on to the ERB. Non-pricing functions of the ERB with respect to the petroleum industry were transferred to the DOE, i.e., regulating the capacities of new refineries.

· February 10, 1998 ― enactment of Republic Act 8479: Downstream Oil Industry Deregulation Act of 1998, which prescribed a five-month transition period, before full deregulation of the oil industry, during which ERB would implement an automatic pricing mechanism (APM) for petroleum products every month.

· June 12, 1998 ― the Philippine oil industry was fully deregulated, thus, ERB’s focus of responsibility centered on the electric industry.

· June 8, 2001 ― enactment of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA) of 2001. The Act abolished the ERB and created in its place the Energy Regulatory Commission (ERC) which is a purely independent regulatory body performing the combined quasi-judicial, quasi-legislative and administrative functions in the electric industry.[14]

Throughout the years, the scope of the regulation has gradually narrowed from that of public services in 1902 to the electricity industry and water resources in 1972 to the electric power industry and oil industry in 1977 to the electric industry alone in 1998. The ERC retains the ERB’s traditional rate and service regulation functions. However, the ERC now also has to promote competitive operations in the electricity market. RA 9136 expanded the ERC’s concerns to encompass both the consumers and the utility investors.

Thus, the EPIRA provides a framework for the restructuring of the industry, including the privatization of the assets of the National Power Corporation (NPC), the transition to a competitive structure, and the delineation of the roles of various government agencies and the private entities. The law ordains the division of the industry into four (4) distinct sectors, namely: generation, transmission, distribution and supply. Corollarily, the NPC generating plants have to privatized and its transmission business spun off and privatized thereafter.

In tandem with the restructuring of the industry is the establishment of “a strong and purely independent regulatory body.” Thus, the law created the ERC in place of the Energy Regulatory Board (ERB).

To achieve its aforestated goal, the law has reconfigured the organization of the regulatory body. x x x[15]

There is no question in our minds that, because of the expansion of the ERC’s functions and concerns, there was a valid abolition of the ERB. Thus, there is no merit to KERB’s allegation that there is an impairment of the security of tenure of the ERB’s employees.

WHEREFORE, we DISMISS the petition. No costs.

SO ORDERED.

G.R. No. 155336 November 25, 2004

COMMISSION ON HUMAN RIGHTS EMPLOYEES' ASSOCIATION (CHREA) Represented by its President, MARCIAL A. SANCHEZ, JR., petitioner,

vs.

COMMISSION ON HUMAN RIGHTS, respondent.

CHICO-NAZARIO, J.:

Can the Commission on Human Rights lawfully implement an upgrading and reclassification of personnel positions without the prior approval of the Department of Budget and Management?

Before this Court is a petition for review filed by petitioner Commission on Human Rights Employees' Association (CHREA) challenging the Decision1 dated 29 November 2001 of the Court of Appeals in CA-G.R. SP No. 59678 affirming the Resolutions2 dated 16 December 1999 and 09 June 2000 of the Civil Service Commission (CSC), which sustained the validity of the upgrading and reclassification of certain personnel positions in the Commission on Human Rights (CHR) despite the disapproval thereof by the Department of Budget and Management (DBM). Also assailed is the resolution dated 11 September 2002 of the Court of Appeals denying the motion for reconsideration filed by petitioner.

The antecedent facts which spawned the present controversy are as follows:

On 14 February 1998, Congress passed Republic Act No. 8522, otherwise known as the General Appropriations Act of 1998. It provided for Special Provisions Applicable to All Constitutional Offices Enjoying Fiscal Autonomy. The last portion of Article XXXIII covers the appropriations of the CHR. These special provisions state:

1. Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits of their respective appropriations as authorized in this Act, the Constitutional Commissions and Offices enjoying fiscal autonomy are authorized to formulate and implement the organizational structures of their respective offices, to fix and determine the salaries, allowances, and other benefits of their personnel, and whenever public interest so requires, make adjustments in their personal services itemization including, but not limited to, the transfer of item or creation of new positions in their respective offices: PROVIDED, That officers and employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and separation pay in accordance with existing laws, which shall be payable from any unexpended balance of, or savings in the appropriations of their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in accordance with salary rates, allowances and other benefits authorized under compensation standardization laws.

2. Use of Savings. The Constitutional Commissions and Offices enjoying fiscal autonomy are hereby authorized to use savings in their respective appropriations for: (a) printing and/or publication of decisions, resolutions, and training information materials; (b) repair, maintenance and improvement of central and regional offices, facilities and equipment; (c) purchase of books, journals, periodicals and equipment; (d) necessary expenses for the employment of temporary, contractual and casual employees; (e) payment of extraordinary and miscellaneous expenses, commutable representation and transportation allowances, and fringe benefits for their officials and employees as may be authorized by law; and (f) other official purposes, subject to accounting and auditing rules and regulations. (Emphases supplied)

on the strength of these special provisions, the CHR, through its then Chairperson Aurora P. Navarette-Reciña and Commissioners Nasser A. Marohomsalic, Mercedes V. Contreras, Vicente P. Sibulo, and Jorge R. Coquia, promulgated Resolution No. A98-047 on 04 September 1998, adopting an upgrading and reclassification scheme among selected positions in the Commission, to wit:

WHEREAS, the General Appropriations Act, FY 1998, R.A. No. 8522 has provided special provisions applicable to all Constitutional Offices enjoying Fiscal Autonomy, particularly on organizational structures and authorizes the same to formulate and implement the organizational structures of their respective offices to fix and determine the salaries, allowances and other benefits of their personnel and whenever public interest so requires, make adjustments in the personnel services itemization including, but not limited to, the transfer of item or creation of new positions in their respective offices: PROVIDED, That officers and employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and separation pay in accordance with existing laws,

which shall be payable from any unexpanded balance of, or savings in the appropriations of their respective offices;

Whereas, the Commission on Human Rights is a member of the Constitutional Fiscal Autonomy Group (CFAG) and on July 24, 1998, CFAG passed an approved Joint Resolution No. 49 adopting internal rules implementing the special provisions heretoforth mentioned;

NOW THEREFORE, the Commission by virtue of its fiscal autonomy hereby approves and authorizes the upgrading and augmentation of the commensurate amount generated from savings under Personal Services to support the implementation of this resolution effective Calendar Year 1998;

Let the Human Resources Development Division (HRDD) prepare the necessary Notice of Salary Adjustment and other appropriate documents to implement this resolution; . . . .3 (Emphasis supplied)

Annexed to said resolution is the proposed creation of ten additional plantilla positions, namely: one Director IV position, with Salary Grade 28 for the Caraga Regional Office, four Security Officer II with Salary Grade 15, and five Process Servers, with Salary Grade 5 under the Office of the Commissioners. 4

On 19 October 1998, CHR issued Resolution No. A98-0555 providing for the upgrading or raising of salary grades of the following positions in the Commission:

Number of Positions

Position

Title

Salary Grade

Total Salary Requirements

From

To

From

To

12

Attorney VI (In the Regional Field Offices)

Director IV

26

28

P229,104.00

4

Director III

Director IV

27

28

38,928.00

1

Financial & Management Officer II

Director IV

24

28

36,744.00

1

Budget Officer III

Budget Officer IV

18

24

51,756.00

1

Accountant III

Chief Accountant

18

24

51,756.00

1

Cashier III

Cashier V

18

24

51,756.00

1

Information Officer V

Director IV

24

28

36,744.006

It, likewise, provided for the creation and upgrading of the following positions:

A. Creation

Number of Positions

Position Title

Salary Grade

Total Salary Requirements

4

Security Officer II (Coterminous)

15

684,780.00

B. Upgrading

Number of Positions

Position Title

Salary Grade

Total Salary Requirements

From

To

From

To

1

Attorney V

Director IV

25

28

P28,092.00

2

Security Officer I

Security Officer II

11

15

57,456.00

----------------

Total 3

P 85,548.007

To support the implementation of such scheme, the CHR, in the same resolution, authorized the augmentation of a commensurate amount generated from savings under Personnel Services.

By virtue of Resolution No. A98-062 dated 17 November 1998, the CHR "collapsed" the vacant positions in the body to provide additional source of funding for said staffing modification. Among the positions collapsed were: one Attorney III, four Attorney IV, one Chemist III, three Special Investigator I, one Clerk III, and one Accounting Clerk II.8

The CHR forwarded said staffing modification and upgrading scheme to the DBM with a request for its approval, but the then DBM secretary Benjamin Diokno denied the request on the following justification:

… Based on the evaluations made the request was not favorably considered as it effectively involved the elevation of the field units from divisions to services.

The present proposal seeks further to upgrade the twelve (12) positions of Attorney VI, SG-26 to Director IV, SG-28. This would elevate the field units to a bureau or regional office, a level even higher than the one previously denied.

The request to upgrade the three (3) positions of Director III, SG-27 to Director IV, SG-28, in the Central Office in effect would elevate the services to Office and change the context from support to substantive without actual change in functions.

In the absence of a specific provision of law which may be used as a legal basis to elevate the level of divisions to a bureau or regional office, and the services to offices, we reiterate our previous stand denying the upgrading of the twelve (12) positions of Attorney VI, SG-26 to Director III, SG-27 or Director IV, SG-28, in the Field Operations Office (FOO) and three (3) Director III, SG-27 to Director IV, SG-28 in the Central Office.

As represented, President Ramos then issued a Memorandum to the DBM Secretary dated 10 December 1997, directing the latter to increase the number of Plantilla positions in the CHR both Central and Regional Offices to implement the Philippine Decade Plan on Human Rights Education, the Philippine Human Rights Plan and Barangay Rights Actions Center in accordance with existing laws. (Emphasis in the original)

Pursuant to Section 78 of the General Provisions of the General Appropriations Act (GAA) FY 1998, no organizational unit or changes in key positions shall be authorized unless provided by law or directed by the President, thus, the creation of a Finance Management Office and a Public Affairs Office cannot be given favorable recommendation.

Moreover, as provided under Section 2 of RA No. 6758, otherwise known as the Compensation Standardization Law, the Department of Budget and Management is directed to establish and administer a unified compensation and position classification system in the government. The Supreme Court ruled in the case of Victorina Cruz vs. Court of Appeals, G.R. No. 119155, dated January 30, 1996, that this Department has the sole power and discretion to administer the compensation and position classification system of the National Government.

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. We therefore reiterate our previous stand on the matter.9 (Emphases supplied)

In light of the DBM's disapproval of the proposed personnel modification scheme, the CSC-National Capital Region Office, through a memorandum dated 29 March 1999, recommended to the CSC-Central Office that the subject appointments be rejected owing to the DBM's disapproval of the plantilla reclassification.

Meanwhile, the officers of petitioner 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. CHREA stood its ground in saying that the DBM is the only agency with appropriate authority mandated by law to evaluate and approve matters of reclassification and upgrading, as well as creation of positions.

The CSC-Central Office denied CHREA's request in a Resolution dated 16 December 1999, and reversed the recommendation of the CSC-Regional Office that the upgrading scheme be censured. The decretal portion of which reads:

WHEREFORE, the request of Ronnie N. Rosero, Hubert V. Ruiz, Flordeliza A. Briones, George Q. Dumlao [and], Corazon A. Santos-Tiu, is hereby denied.10

CHREA filed a motion for reconsideration, but the CSC-Central Office denied the same on 09 June 2000.

Given the cacophony of judgments between the DBM and the CSC, petitioner CHREA elevated the matter to the Court of Appeals. The Court of Appeals 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 CHR's fiscal autonomy. The fallo of the Court of Appeals decision provides:

IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED and the questioned Civil Service Commission Resolution No. 99-2800 dated December 16, 1999 as well as No. 001354 dated June 9, 2000, are hereby AFFIRMED. No cost.11

Unperturbed, petitioner filed this petition in this Court contending that:

A.

…THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT UNDER THE 1987 CONSTITUTION, THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL AUTONOMY.

B.

…THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE CONSTRUCTION OF THE COMMISSION ON HUMAN RIGHTS OF REPUBLIC ACT NO. 8522 (THE GENERAL APPROPRIATIONS ACT FOR THE FISCAL YEAR 1998) DESPITE ITS BEING IN SHARP CONFLICT WITH THE 1987 CONSTITUTION AND THE STATUTE ITSELF.

C.

…THE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN AFFIRMING THE VALIDITY OF THE CIVIL SERVICE COMMISSION RESOLUTION NOS. 992800 AND 001354 AS WELL AS THAT OF THE OPINION OF THE DEPARTMENT OF JUSTICE IN STATING THAT THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL

AUTONOMY UNDER THE 1987 CONSTITUTION AND THAT THIS FISCAL AUTONOMY INCLUDES THE ACTION TAKEN BY IT IN COLLAPSING, UPGRADING AND RECLASSIFICATION OF POSITIONS THEREIN.12

The central question we must answer in order to resolve this case is: Can the Commission on Human Rights 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?

Petitioner CHREA grouses that the Court of Appeals and the CSC-Central Office both erred in sanctioning the CHR's alleged blanket authority to upgrade, reclassify, and create positions inasmuch as the approval of the DBM relative to such scheme is still indispensable. Petitioner bewails that the CSC and the Court of Appeals erroneously assumed that CHR enjoys fiscal autonomy insofar as financial matters are concerned, particularly with regard to the upgrading and reclassification of positions therein.

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, Marcial A. Sanchez, Jr., has the authority to sue the CHR. The CHR contends that it has the authority to cause the upgrading, reclassification, plantilla creation, and collapsing scheme sans the approval of the DBM because it enjoys fiscal autonomy.

After a thorough consideration of the arguments of both parties and an assiduous scrutiny of the records in the case at bar, it is the Court's opinion that the present petition is imbued with merit.

On petitioner's 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.13 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 CHR's upgrading scheme, if found to be valid, potentially entails eating up the Commission's 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 CHREA's request to affirm the recommendation of the CSC-National Capital Region Office.

CHREA's personality to bring the suit was a non-issue in the Court of Appeals 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.14

We now delve into the main issue of whether or not the approval by the DBM is a condition precedent to the enactment of an upgrading, reclassification, creation and collapsing of plantilla positions in the CHR.

Germane to our discussion is Rep. Act No. 6758, An Act Prescribing a Revised Compensation and Position Classification System in the Government and For Other Purposes, or the Salary Standardization Law, dated 01 July 1989, which provides in Sections 2 and 4 thereof that it is the DBM that shall establish and administer a unified Compensation and Position Classification System. Thus:

SEC. 2. Statement of Policy. -- It is hereby declared the policy of the State to provide 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. In determining rates of pay, due regard shall be given to, among others, prevailing rates in the private sector for comparable work. For this purpose, the Department of Budget and Management (DBM) is hereby directed to establish and administer a unified Compensation and Position Classification System, hereinafter referred to as the System as provided for in Presidential Decree No. 985, as amended, that shall be applied for all government entities, as mandated by the Constitution. (Emphasis supplied.)

SEC. 4. Coverage. – The Compensation and Position Classification System herein provided shall apply to all positions, appointive or elective, on full or part-time basis, now existing or hereafter created in the government, including government-owned or controlled corporations and government financial institutions.

The term "government" refers to the Executive, the Legislative and the Judicial Branches and the Constitutional Commissions and shall include all, but shall not be limited to, departments, bureaus, offices, boards, commissions, courts, tribunals, councils, authorities, administrations, centers, institutes, state colleges and universities, local government units, and the armed forces. The term "government-owned or controlled corporations and financial institutions" shall include all corporations and financial

institutions owned or controlled by the National Government, whether such corporations and financial institutions perform governmental or proprietary functions. (Emphasis supplied.)

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

This power to "administer" is not purely ministerial in character as erroneously held by the Court of Appeals. 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.15

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 Philippine Retirement Authority (PRA) v. Jesusito L. Buñag,16 this Court, speaking through Mr. Justice Reynato Puno, 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 the words of the Court –

Despite the power granted to the Board of Directors of PRA to establish and fix a compensation and benefits scheme for its employees, the same is subject to the review of the Department of Budget and Management. However, in view of the express powers granted to PRA under its charter, the extent of the review authority of the Department of Budget and Management is limited. As stated in Intia, the task of the Department of Budget and Management is simply to review the compensation and benefits plan of the government agency or entity concerned and determine if the same complies with the prescribed policies and guidelines issued in this regard. The role of the Department of Budget and Management is supervisorial in nature, its main duty being to ascertain that the proposed compensation, benefits and other incentives to be given to PRA officials and employees adhere to the policies and guidelines issued in accordance with applicable laws.

In Victorina Cruz v. Court of Appeals,17 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. Commission on Audit,18 the Court held that although the charter19 of the Philippine Postal Corporation (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. This Court intoned:

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 DBM's function is merely to ensure that the action taken by the Board of Directors complies with the requirements of the law, specifically, that PPC's compensation system "conforms as closely as possible with that provided for under R.A. No. 6758." (Emphasis supplied.)

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 Revised Administrative Code 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. (Emphasis supplied.)

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.

The Court of Appeals incorrectly relied on the pronouncement of the CSC-Central Office that the CHR is a constitutional commission, and as such enjoys fiscal autonomy.20

Palpably, the Court of Appeals' Decision was based on the mistaken premise that the CHR belongs to the species of constitutional commissions. But, Article IX of the Constitution states in no uncertain terms that only the CSC, the Commission on Elections, and the Commission on Audit shall be tagged as Constitutional Commissions with the appurtenant right to fiscal autonomy. Thus:

Sec. 1. The Constitutional Commissions, which shall be independent, are the Civil Service Commission, the Commission on Elections, and the Commission on Audit.

Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be automatically and regularly released.

Along the same vein, the Administrative Code, in Chapter 5, Sections 24 and 26 of Book II on Distribution of Powers of Government, the constitutional commissions shall include only the Civil Service Commission, the Commission on Elections, and the Commission on Audit, 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. (Emphasis ours.)

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.21

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 Civil Service Commission, the Commission on Audit, the Commission on Elections, and the Office of the Ombudsman, which enjoy fiscal autonomy. Thus, in Bengzon,24 we explained:

As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil Service Commission, the Commission on Audit, the Commission on Elections, and the Office of the Ombudsman contemplates a guarantee of full flexibility to allocate and utilize their resources with the wisdom and dispatch that their needs require. It recognizes the power and authority to levy, assess and collect fees, fix rates of compensation not exceeding the highest rates authorized by law for compensation and pay plans of the government and allocate and disburse such sums as may be provided by law or prescribed by them in the course of the discharge of their functions.

. . .

The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and constraints on the manner the independent constitutional offices allocate and utilize the funds appropriated for their operations is anathema to fiscal autonomy and violative not only of the express mandate of the Constitution but especially as regards the Supreme Court, of the independence and separation of powers upon which the entire fabric of our constitutional system is based. In the interest of comity and cooperation, the Supreme Court, [the] Constitutional Commissions, and the Ombudsman have so far limited their objections to constant reminders. We now agree with the petitioners that this grant of autonomy should cease to be a meaningless provision. (Emphasis supplied.)

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. In contrast, the Special Provision Applicable to the Judiciary under Article XXVIII of the General Appropriations Act of 1998 specifically mentions that such special provision applies to the judiciary and had categorically authorized the Chief Justice of the Supreme Court to formulate and implement the organizational structure of the Judiciary, to wit:

1. Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits of their respective appropriations authorized in this Act, the Chief Justice of the Supreme Court is authorized to formulate and implement organizational structure of the Judiciary, to fix and determine the salaries, allowances, and other benefits of their personnel, and whenever public interest so requires, make adjustments in the personal services itemization including, but not limited to, the transfer of item or creation of new positions in the Judiciary; PROVIDED, That officers and employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and separation pay in accordance with existing law, which shall be payable from any unexpended balance of, or savings in the appropriations of their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in accordance with salary rates, allowances and other benefits authorized under compensation standardization laws. (Emphasis supplied.)

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.25 (Emphasis supplied.)

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

Indeed, the law upon which respondent heavily anchors its case upon has expressly provided that any form of adjustment in the organizational structure must be within the parameters of the Salary Standardization Law.

The Salary Standardization Law has gained impetus in addressing one of the basic causes of discontent of many civil servants.27 For this purpose, Congress has delegated to the DBM the power to administer the Salary Standardization Law and to ensure that the spirit behind it is observed. This power is part of the system of checks and balances or system of restraints in our government. The DBM's exercise of such authority is not in itself an arrogation inasmuch as it is pursuant to the paramount law of the land, the Salary Standardization Law and the Administrative Code.

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 CHR's 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 law's 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. Court of Appeals,28 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.

To be sure, considering his expertise on matters affecting the nation's coffers, the Secretary of the DBM, as the President's alter ego, knows from where he speaks inasmuch as he has the front seat view of the adverse effects of an unwarranted upgrading or creation of positions in the CHR in particular and in the entire government in general.

WHEREFORE, the petition is GRANTED, the Decision dated 29 November 2001 of the Court of Appeals in CA-G.R. SP No. 59678 and its Resolution dated 11 September 2002 are hereby REVERSED and SET ASIDE. The ruling dated 29 March 1999 of the Civil Service Commision-National Capital Region is REINSTATED. The Commission on Human Rights Resolution No. A98-047 dated 04 September 1998, Resolution No. A98-055 dated 19 October 1998 and Resolution No. A98-062 dated 17 November 1998 without the approval of the Department of Budget and Management are disallowed. No pronouncement as to costs.

SO ORDERED.