You are on page 1of 19

SECOND DIVISION

LUCIA BARRAMEDA VDA. DE G.R. No. 176260


BALLESTEROS,

Petitioner,
Present:

CARPIO, J., Chairperson,

NACHURA,
- versus -
PERALTA,

ABAD, and

MENDOZA, JJ.
RURAL BANK OF CANAMAN INC.,
represented by its Liquidator, the
philippine deposit insurance corporation,

Respondent.

Promulgated:

November 24, 2010

X -------------------------------------------------------------------------------------- X

DECISION

MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Civil Procedure
assailing the August 15, 2006 Decision1[1] of the Court of Appeals (CA) in CA-G.R. No. 82711,
modifying the decision of the Regional Trial Court of Iriga City, Branch 36 (RTC-Iriga), in Civil
Case No. IR-3128, by ordering the consolidation of the said civil case with Special Proceeding
Case No. M-5290 (liquidation case) before the Regional Trial Court of Makati City, Branch 59
(RTC-Makati).

It appears from the records that on March 17, 2000, petitioner Lucia Barrameda Vda. De
Ballesteros (Lucia) filed a complaint for Annulment of Deed of Extrajudicial Partition, Deed of
Mortgage and Damages with prayer for Preliminary Injunction against her children, Roy, Rito,
Amy, Arabel, Rico, Abe, Ponce Rex and Adden, all surnamed Ballesteros, and the Rural Bank
of Canaman, Inc., Baao Branch (RBCI) before the RTC-Iriga. The case was docketed as Civil
Case No. IR-3128.

In her complaint, Lucia alleged that her deceased husband, Eugenio, left two (2) parcels
of land located in San Nicolas, Baao, Camarines Sur, each with an area of 357 square meters;
that on March 6, 1995, without her knowledge and consent, her children executed a deed of
extrajudicial partition and waiver of the estate of her husband wherein all the heirs, including
Lucia, agreed to allot the two parcels to Rico Ballesteros (Rico); that, still, without her
knowledge and consent, Rico mortgaged Parcel B of the estate in favor of RBCI which
mortgage was being foreclosed for failure to settle the loan secured by the lot; and that Lucia
was occupying Parcel B and had no other place to live. She prayed that the deed of extrajudicial
partition and waiver, and the subsequent mortgage in favor of RBCI be declared null and void
having been executed without her knowledge and consent. She also prayed for damages.

In its Answer, RBCI claimed that in 1979, Lucia sold one of the two parcels to Rico which
represented her share in the estate of her husband. The extrajudicial partition, waiver and
mortgage were all executed with the knowledge and consent of Lucia although she was not able
to sign the document. RBCI further claimed that Parcel B had already been foreclosed way back
in 1999 which fact was known to Lucia through the auctioning notary public. Attorneys fees were
pleaded as counterclaim.
The case was then set for pre-trial conference. During the pre-trial, RBCIs counsel filed
a motion to withdraw after being informed that Philippine Deposit Insurance Corporation (PDIC)
would handle the case as RBCI had already been closed and placed under the receivership of
the PDIC. Consequently, on February 4, 2002, the lawyers of PDIC took over the case of RBCI.

On May 9, 2003, RBCI, through PDIC, filed a motion to dismiss on the ground that the
RTC-Iriga has no jurisdiction over the subject matter of the action. RBCI stated that pursuant to
Section 30, Republic Act No. 7653 (RA No. 7653), otherwise known as the New Central Bank
Act, the RTC-Makati, already constituted itself, per its Order dated August 10, 2001, as the
liquidation court to assist PDIC in undertaking the liquidation of RBCI. Thus, the subject matter
of Civil Case No. IR-3128 fell within the exclusive jurisdiction of such liquidation court. Lucia
opposed the motion.

On July 29, 2003, the RTC-Iriga issued an order2[2] granting the Motion to Dismiss, to wit:

This resolves the Motion to Dismiss filed by the defendant Rural Bank of Canaman, Inc.,
premised on the ground that this court has no jurisdiction over the subject matter of the action.
This issue of jurisdiction was raised in view of the pronouncement of the Supreme Court in Ong
v. C.A. 253 SCRA 105 and in the case of Hernandez v. Rural Bank of Lucena, Inc., G.R. No. L-
29791 dated January 10, 1978, wherein it was held that the liquidation court shall have
jurisdiction to adjudicate all claims against the bank whether they be against assets of the
insolvent bank, for Specific Performance, Breach of Contract, Damages or whatever.

It is in view of this jurisprudential pronouncement made by no less than the Supreme Court, that
this case is, as far as defendant Rural Bank of Canaman Inc., is concerned, hereby ordered
DISMISSED without prejudice on the part of the plaintiff to ventilate their claim before the
Liquidation Court now, RTC Branch 59, Makati City.

SO ORDERED.
Not in conformity, Lucia appealed the RTC ruling to the CA on the ground that the RTC-
Iriga erred in dismissing the case because it had jurisdiction over Civil Case No. IR-3128 under
the rule on adherence of jurisdiction.

On August 15, 2006, the CA rendered the questioned decision ordering the
consolidation of Civil Case No. IR-3128 and the liquidation case pending before RTC-Makati.
The appellate court ratiocinated thus:

The consolidation is desirable in order to prevent confusion, to avoid multiplicity of suits


and to save unnecessary cost and expense. Needless to add, this procedure is well in accord
with the principle that the rules of procedure shall be liberally construed in order to promote their
object and to assist the parties in obtaining just, speedy and inexpensive determination of every
action and proceeding (Vallacar Transit, Inc. v. Yap, 126 SCRA 500 [1983]; Suntay v. Aguiluz,
209 SCRA 500 [1992] citing Ramos v. Ebarle, 182 SCRA 245 [1990]). It would be more in
keeping with the demands of equity if the cases are simply ordered consolidated. Pursuant to
Section 2, Rule 1, Revised Rules of Court, the rules on consolidation should be liberally
construed to achieve the object of the parties in obtaining just, speedy and inexpensive
determination of their cases (Allied Banking Corporation v. Court of Appeals, 259 SCRA 371
[1996]).

The dispositive portion of the decision reads:

IN VIEW OF ALL THE FOREGOING, the appealed decision is hereby MODIFIED, in such a
way that the dismissal of this case (Civil Case No. IR-3128) is set aside and in lieu thereof
another one is entered ordering the consolidation of said case with the liquidation case
docketed as Special Proceeding No. M-5290 before Branch 59 of the Regional Trial Court of
Makati City, entitled In Re: Assistance in the Judicial Liquidation of Rural Bank of Canaman,
Camarines Sur, Inc., Philippine Deposit Corporation, Petitioner. No pronouncement as to cost.

SO ORDERED.3[3]
Lucia filed a motion for reconsideration4[4] but it was denied by the CA in its Resolution dated
December 14, 2006.5[5]

Hence, the present petition for review on certiorari anchored on the following

GROUNDS

(I)

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE REGIONAL TRIAL COURT
OF IRIGA CITY, BRANCH 36 IS VESTED WITH JURISDICTION TO CONTINUE TRYING AND
ULTIMATELY DECIDE CIVIL CASE NO. IR-3128.

(II)

THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN


ORDERING THE CONSOLIDATION OF CIVIL CASE NO. IR-3128 WITH THE LIQUIDATION
CASE DOCKETED AS SPECIAL PROCEEDINGS NO. M-5290 BEFORE BRANCH 59 OF THE
REGIONAL TRIAL COURT OF MAKATI CITY.6[6]

Given the foregoing arguments, the Court finds that the core issue to be resolved in this
petition involves a determination of whether a liquidation court can take cognizance of a case
wherein the main cause of action is not a simple money claim against a bank ordered closed,
placed under receivership of the PDIC, and undergoing a liquidation proceeding.

Lucia contends that the RTC-Iriga is vested with jurisdiction over Civil Case No. 3128, the
constitution of the liquidation court notwithstanding. According to her, the case was filed before
the RTC-Iriga on March 17, 2000 at the time RBCI was still doing business or before the
defendant bank was placed under receivership of PDIC in January 2001.

She further argues that the consolidation of the two cases is improper. Her case, which is for
annulment of deed of partition and waiver, deed of mortgage and damages, cannot be legally
brought before the RTC-Makati with the liquidation case considering that her cause of action
against RBCI is not a simple claim arising out of a creditor-debtor relationship, but one which
involves her rights and interest over a certain property irregularly acquired by RBCI. Neither is
she a creditor of the bank, as only the creditors of the insolvent bank are allowed to file and
ventilate claims before the liquidator, pursuant to the August 10, 2001 Order of the RTC-Makati
which granted the petition for assistance in the liquidation of RBCI.

In its Comment,7[7] PDIC, as liquidator of RBCI, counters that the consolidation of Civil Case
No. 3128 with the liquidation proceeding is proper. It posits that the liquidation court of RBCI,
having been established, shall have exclusive jurisdiction over all claims against the said bank.

After due consideration, the Court finds the petition devoid of merit.

Lucias argument, that the RTC-Iriga is vested with jurisdiction to continue trying Civil Case No.
IR-3128 until its final disposition, evidently falls out from a strained interpretation of the law and
jurisprudence. She contends that:

Since the RTC-Iriga has already obtained jurisdiction over the case it should continue exercising
such jurisdiction until the final termination of the case. The jurisdiction of a court once attached
cannot be ousted by subsequent happenings or events, although of a character which would
have prevented jurisdiction from attaching in the first instance, and the Court retains jurisdiction
until it finally disposes of the case (Aruego Jr. v. Court of Appeals, 254 SCRA 711).

When a court has already obtained and is exercising jurisdiction over a controversy, its
jurisdiction to proceed to final determination of the case is not affected by a new legislation
transferring jurisdiction over such proceedings to another tribunal. (Alindao v. Joson, 264 SCRA
211). Once jurisdiction is vested, the same is retained up to the end of the litigation (Bernate v.
Court of Appeals, 263 SCRA 323).8[8]

The afore-quoted cases, cited by Lucia to bolster the plea for the continuance of her case, find
no application in the case at bench.

Indeed, the Court recognizes the doctrine on adherence of jurisdiction. Lucia, however, must be
reminded that such principle is not without exceptions. It is well to quote the ruling of the CA on
this matter, thus:

This Court is not unmindful nor unaware of the doctrine on the adherence of jurisdiction.
However, the rule on adherence of jurisdiction is not absolute and has exceptions. One of the
exceptions is that when the change in jurisdiction is curative in character (Garcia v. Martinez, 90
SCRA 331 [1979]; Calderon, Sr. v. Court of Appeals, 100 SCRA 459 [1980]; Atlas Fertilizer
Corporation v. Navarro, 149 SCRA 432 [1987]; Abad v. RTC of Manila, Br. Lll, 154 SCRA 664
[1987]).

For sure, Section 30, R.A. 7653 is curative in character when it declared that the liquidation
court shall have jurisdiction in the same proceedings to assist in the adjudication of the disputed
claims against the Bank. The interpretation of this Section (formerly Section 29, R.A. 265)
becomes more obvious in the light of its intent. In Manalo v. Court of Appeals (366 SCRA 752,
[2001]), the Supreme Court says:

xxx The requirement that all claims against the bank be pursued in the liquidation proceedings
filed by the Central Bank is intended to prevent multiplicity of actions against the insolvent bank
and designed to establish due process and orderliness in the liquidation of the bank, to obviate
the proliferation of litigations and to avoid injustice and arbitrariness (citing Ong v. CA, 253
SCRA 105 [1996]). The lawmaking body contemplated that for convenience, only one court, if
possible, should pass upon the claims against the insolvent bank and that the liquidation court
should assist the Superintendents of Banks and regulate his operations (citing Central Bank of
the Philippines, et al. v. CA, et al., 163 SCRA 482 [1988]).9[9]

As regards Lucias contention that jurisdiction already attached when Civil Case No. IR-
3128 was filed with, and jurisdiction obtained by, the RTC-Iriga prior to the filing of the
liquidation case before the RTC-Makati, her stance fails to persuade this Court. In refuting this
assertion, respondent PDIC cited the case of Lipana v. Development Bank of Rizal10[10] where
it was held that the time of the filing of the complaint is immaterial, viz:

It is the contention of petitioners, however, that the placing under receivership of Respondent
Bank long after the filing of the complaint removed it from the doctrine in the said Morfe Case.

This contention is untenable. The time of the filing of the complaint is immaterial. It is the
execution that will obviously prejudice the other depositors and creditors. Moreover, as stated in
the said Morfe case, the effect of the judgment is only to fix the amount of the debt, and not to
give priority over other depositors and creditors.

The cited Morfe case11[11] held that after the Monetary Board has declared that a bank is
insolvent and has ordered it to cease operations, the Board becomes the trustee of its assets for
the equal benefit of all the creditors, including depositors. The assets of the insolvent banking
institution are held in trust for the equal benefit of all creditors, and after its insolvency, one
cannot obtain an advantage or a preference over another by an attachment, execution or
otherwise.
Thus, to allow Lucias case to proceed independently of the liquidation case, a possibility of
favorable judgment and execution thereof against the assets of RBCI would not only prejudice
the other creditors and depositors but would defeat the very purpose for which a liquidation
court was constituted as well.

Anent the second issue, Lucia faults the CA in directing the consolidation of Civil Case No. IR-
3128 with Special Proceedings No. M-5290. The CA committed no error. Lucias complaint
involving annulment of deed of mortgage and damages falls within the purview of a disputed
claim in contemplation of Section 30 of R.A. 7653 (The New Central Bank Act). The jurisdiction
should be lodged with the liquidation court. Section 30 provides:

Sec. 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the head of
the supervising or examining department, the Monetary Board finds that a bank or quasi-bank:

(a) is unable to pay its liabilities as they become due in the ordinary course of business:
Provided, That this shall not include inability to pay caused by extraordinary demands induced
by financial panic in the banking community;

(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its
liabilities; or

(c) cannot continue in business without involving probable losses to its depositors or
creditors; or

(d) has wilfully violated a cease and desist order under Section 37 that has become final,
involving acts or transactions which amount to fraud or a dissipation of the assets of the
institution; in which cases, the Monetary Board may summarily and without need for prior
hearing forbid the institution from doing business in the Philippines and designate the Philippine
Deposit Insurance Corporation as receiver of the banking institution.

For a quasi-bank, any person of recognized competence in banking or finance may be


designated as receiver.

The receiver shall immediately gather and take charge of all the assets and liabilities of the
institution, administer the same for the benefit of its creditors, and exercise the general powers
of a receiver under the Revised Rules of Court but shall not, with the exception of administrative
expenditures, pay or commit any act that will involve the transfer or disposition of any asset of
the institution: Provided, That the receiver may deposit or place the funds of the institution in
non-speculative investments. The receiver shall determine as soon as possible, but not later
than ninety (90) days from take over, whether the institution may be rehabilitated or otherwise
placed in such a condition that it may be permitted to resume business with safety to its
depositors and creditors and the general public: Provided, That any determination for the
resumption of business of the institution shall be subject to prior approval of the Monetary
Board.
If the receiver determines that the institution cannot be rehabilitated or permitted to resume
business in accordance with the next preceding paragraph, the Monetary Board shall notify in
writing the board of directors of its findings and direct the receiver to proceed with the liquidation
of the institution. The receiver shall:

(1) file ex parte with the proper regional trial court, and without requirement of prior notice or
any other action, a petition for assistance in the liquidation of the institution pursuant to a
liquidation plan adopted by the Philippine Deposit Insurance Corporation for general application
to all closed banks. In case of quasi-banks, the liquidation plan shall be adopted by the
Monetary Board. Upon acquiring jurisdiction, the court shall, upon motion by the receiver after
due notice, adjudicate disputed claims against the institution, assist the enforcement of
individual liabilities of the stockholders, directors and officers, and decide on other issues as
may be material to implement the liquidation plan adopted. The receiver shall pay the cost of the
proceedings from the assets of the institution.

(2) convert the assets of the institution to money, dispose of the same to creditors and other
parties, for the purpose of paying the debts of such institution in accordance with the rules on
concurrence and preference of credit under the Civil Code of the Philippines and he may, in the
name of the institution, and with the assistance of counsel as he may retain, institute such
actions as may be necessary to collect and recover accounts and assets of, or defend any
action against, the institution. The assets of an institution under receivership or liquidation shall
be deemed in custodia legis in the hands of the receiver and shall, from the moment the
institution was placed under such receivership or liquidation, be exempt from any order of
garnishment, levy, attachment, or execution. [Emphasis supplied]

xxx

Disputed claims refers to all claims, whether they be against the assets of the insolvent bank,
for specific performance, breach of contract, damages, or whatever.12[12] Lucias action being a
claim against RBCI can properly be consolidated with the liquidation proceedings before the
RTC-Makati. A liquidation proceeding has been explained in the case of In Re: Petition For
Assistance in the Liquidation of the Rural Bank of BOKOD (Benguet), Inc. v. Bureau of Internal
Revenue13[13] as follows:
A liquidation proceeding is a single proceeding which consists of a number of cases properly
classified as "claims." It is basically a two-phased proceeding. The first phase is concerned with
the approval and disapproval of claims. Upon the approval of the petition seeking the assistance
of the proper court in the liquidation of a closed entity, all money claims against the bank are
required to be filed with the liquidation court. This phase may end with the declaration by the
liquidation court that the claim is not proper or without basis. On the other hand, it may also end
with the liquidation court allowing the claim. In the latter case, the claim shall be classified
whether it is ordinary or preferred, and thereafter included Liquidator. In either case, the order
allowing or disallowing a particular claim is final order, and may be appealed by the party
aggrieved thereby.

The second phase involves the approval by the Court of the distribution plan prepared by the
duly appointed liquidator. The distribution plan specifies in detail the total amount available for
distribution to creditors whose claim were earlier allowed. The Order finally disposes of the
issue of how much property is available for disposal. Moreover, it ushers in the final phase of
the liquidation proceeding - payment of all allowed claims in accordance with the order of legal
priority and the approved distribution plan.

xxx

A liquidation proceeding is commenced by the filing of a single petition by the Solicitor General
with a court of competent jurisdiction entitled, "Petition for Assistance in the Liquidation of e.g.,
Pacific Banking Corporation. All claims against the insolvent are required to be filed with the
liquidation court. Although the claims are litigated in the same proceeding, the treatment is
individual. Each claim is heard separately. And the Order issued relative to a particular claim
applies only to said claim, leaving the other claims unaffected, as each claim is considered
separate and distinct from the others. x x x [Emphasis supplied.]

It is clear, therefore, that the liquidation court has jurisdiction over all claims, including that of
Lucia against the insolvent bank. As declared in Miranda v. Philippine Deposit Insurance
Corporation,14[14] regular courts do not have jurisdiction over actions filed by claimants against
an insolvent bank, unless there is a clear showing that the action taken by the BSP, through the
Monetary Board, in the closure of financial institutions was in excess of jurisdiction, or with
grave abuse of discretion. The same is not obtaining in this present case.
The power and authority of the Monetary Board to close banks and liquidate them thereafter
when public interest so requires is an exercise of the police power of the State. Police power,
however, is subject to judicial inquiry. It may not be exercised arbitrarily or unreasonably and
could be set aside if it is either capricious, discriminatory, whimsical, arbitrary, unjust, or is
tantamount to a denial of due process and equal protection clauses of the Constitution.15[15]

In sum, this Court holds that the consolidation is proper considering that the liquidation court
has jurisdiction over Lucias action. It would be more in keeping with law and equity if Lucias
case is consolidated with the liquidation case in order to expeditiously determine whether she is
entitled to recover the property subject of mortgage from RBCI and, if so, how much she is
entitled to receive from the remaining assets of the bank.

WHEREFORE, the petition is DENIED.

SO ORDERED.

JOSE CATRAL MENDOZA Associate Justice

2.
LOUIS 'BAROK' C. BIRAOGO v. PHILIPPINE TRUTH COMMISSION OF 2010, GR No.
192935, 2010-12-07

Facts:

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 genesis of the foregoing cases can be traced to the events prior to the historic May 2010
elections, when then Senator Benigno Simeon Aquino III declared his staunch condemnation of
graft and corruption with his slogan, "Kung walang corrupt, walang mahirap." The

Filipino people, convinced of his sincerity and of his ability to carry out this noble objective,
catapulted the good senator to the presidency.

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.

In particular, it shall:... a) Identify and determine the reported cases of such graft and corruption
which it will investigate;... b) Collect, receive, review and evaluate evidence related to or
regarding the cases of large scale corruption which it has chosen to investigate, and to this end
require any agency, official or employee of the Executive Branch, including government-owned
or controlled... corporations, to produce documents, books, records and other papers;... c) Upon
proper request or representation, obtain information and documents from the Senate and the
House of Representatives records of investigations conducted by committees thereof relating to
matters or subjects being investigated by the Commission;

Nature of the Truth Commission

As can be gleaned from the above-quoted provisions, 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.

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

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) 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.

(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.

Issues:

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.

main contention of the petitioners on the validity of 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.

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.

Ruling:

Power of the President to Create the Truth Commission

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

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

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 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.

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.

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.[

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.

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.

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]
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.

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."

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]

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

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.

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. [
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.

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. 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.

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.

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.

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 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."[

The president has the authority to create the committee, however EO1 must be
struck down for being unconstitutional because it violates the equal
protection clause of the consti
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.

3.