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BALICAS vs.

FFIB, OFFICE OF THE OMBUDSMAN

MARCH 26, 2011 ~ VBDIAZ

BALICAS vs. FFIB, OFFICE OF THE OMBUDSMAN

G. R. No. 145972

March 23, 2004

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

Respondent BALICAS, PENRO senior environmental management specialist, monitored the


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

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

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

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

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

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

This petition for review on certiorari


ISSUE: WON Balicas is guilty of gross neglect of duty

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

NO

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

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

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

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

SECTION 4. Presidential Proclamation of Environmentally Critical Areas and Projects. The President of
the Philippines may, on his own initiative or upon recommendation of the National Environment
Protection Council, by proclamation declare certain projects, undertakings or areas in the country as
environmentally critical. No person, partnership or corporation shall undertake or operate any such
declared environmentally critical project or area without first securing an Environmental Compliance
Certificate issued by the President or his duly authorized representative. For the proper management of
said critical project or area, the President may by his proclamation reorganize such government offices,
agencies, institutions, corporations or instrumentalities including the re-alignment of government
personnel, and their specific functions and responsibilities.

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

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

(b) establish ambient environmental quality standards;

(c) develop a program of environmental enhancement or protective measures against calamitous factors
such as earthquake, floods, water erosion and others; and

(d) perform such other functions as may be directed by the President from time to time.

The legal duty to monitor housing projects, like the CHP, against calamities such as landslides due to
continuous rain, is clearly placed on the HLURB, not on the petitioner as PENRO senior environmental
management specialist. In fact, the law imposes no clear and direct duty on petitioner to perform such
narrowly defined monitoring function.
IRON AND STEEL AUTHORITY vs. CA and MARIA CRISTINA FERTILIZER CORPORATION

G.R. No. 102976

October 25, 1995

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

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

(j) to initiate expropriation of land required for basic iron and steel facilities for subsequent resale
and/or lease to the companies involved if it is shown that such use of the State’s power is necessary to
implement the construction of capacity which is needed for the attainment of the objectives of the
Authority; xx

The National Steel Corporation (NSC) then a wholly owned subsidiary of the National Development
Corporation which is itself an entity wholly owned by the National Government, embarked on an
expansion program embracing, among other things, the construction of an integrated steel mill in Iligan
City. Pursuant to the expansion program of the NSC, Proc. No. 2239 was issued by the President of the
Philippines withdrawing from sale or settlement a large tract of public located in Iligan City, and
reserving that land for the use and immediate occupancy of NSC.

Since certain portions of the public land subject matter Proclamation No. 2239 were occupied by a non-
operational chemical fertilizer plant and related facilities owned by Maria Cristina Fertilizer Corporation
(“MCFC”), Letter of Instruction (LOI), No. 1277, was issued directing the NSC to “negotiate with the
owners of MCFC, for and on behalf of the Government, for the compensation of MCFC’s present
occupancy rights on the subject land.” LOI No. 1277 also directed that should NSC and private
respondent MCFC fail to reach an agreement within a period of sixty (60) days from the date of LOI No.
1277, petitioner ISA was to exercise its power of eminent domain under P.D. No. 272 and to initiate
expropriation proceedings in respect of occupancy rights of private respondent MCFC relating to the
subject public land as well as the plant itself and related facilities and to cede the same to the NSC.

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

A writ of possession was issued by the trial court in favor of ISA. ISA in turn placed NSC in possession and
control of the land occupied by MCFC’s fertilizer plant installation.

The case proceeded to trial. While the trial was ongoing, however, the statutory existence of petitioner
ISA expired. MCFC then filed a motion to dismiss, contending that no valid judgment could be rendered
against ISA which had ceased to be a juridical person. Petitioner ISA filed its opposition to this motion.
The trial court granted MCFC’s motion to dismiss and did dismiss the case. The dismissal was anchored
on the provision of the Rules of Court stating that “only natural or juridical persons or entities
authorized by law may be parties in a civil case.”

Petitioner ISA moved for reconsideration which the trial court denied.

ISA went on appeal to the CA, which affirmed the order of dismissal of the trial court. At the same time,
however, the Court of Appeals held that it was premature for the trial court to have ruled that the
expropriation suit was not for a public purpose, considering that the parties had not yet rested their
respective cases.

Hence this Petition for Review.

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

HELD: The Decision of the CA to the extent that it affirmed the trial court’s order dismissing the
expropriation proceedings, is hereby REVERSED and SET ASIDE and the case is REMANDED to the court a
quo which shall allow the substitution of the RPfor petitioner ISA

YES

Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action:

Sec. 1. Who May Be Parties. – Only natural or juridical persons or entities authorized by law may be
parties in a civil action.

Examination of the statute which created petitioner ISA shows that ISA falls under category (b) above.
P.D. No. 272, as already noted, contains express authorization to ISA to commence expropriation
proceedings like those here involved. It should also be noted that the enabling statute of ISA expressly
authorized it to enter into certain kinds of contracts “for and in behalf of the Government” in the
following terms: xx

(i) to negotiate, and when necessary, to enter into contracts for and in behalf of the government, for the
bulk purchase of materials, supplies or services for any sectors in the industry, and to maintain
inventories of such materials in order to insure a continuous and adequate supply thereof and thereby
reduce operating costs of such sector; xxx

Clearly, ISA was vested with some of the powers or attributes normally associated with juridical
personality. There is, however, no provision in P.D. No. 272 recognizing ISA as possessing general or
comprehensive juridical personality separate and distinct from that of the Government.

We consider that the ISA is properly regarded as an agent or delegate of the RP. The Republic itself is a
body corporate and juridical person vested with the full panoply of powers and attributes which are
compendiously described as “legal personality.” The relevant definitions are found in the Administrative
Code of 1987:

Sec. 2. General Terms Defined. – Unless the specific words of the text, or the context as a whole, or a
particular statute, require a different meaning:

(1) Government of the RPrefers to the corporate governmental entity through which the functions of
government are exercised throughout the Philippines, including, save as the contrary appears from the
context, the various arms through which political authority is made effective in the Philippines, whether
pertaining to the autonomous regions, the provincial, city, municipal or barangay subdivisions or other
forms of local government.

xxx xxx xxx

(4) Agency of the Government refers to any of the various units of the Government, including a
department, bureau, office, instrumentality, or government-owned or controlled corporation, or a local
government or a distinct unit therein.

xxx xxx xxx

(10) Instrumentality refers to any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter. This term includes regulatory agencies, chartered institutions and government-owned or
controlled corporations.

xxx xxx xxx

When the statutory term of a non-incorporated agency expires, the powers, duties and functions as well
as the assets and liabilities of that agency revert back to, and are re-assumed by, the RP, in the absence
of special provisions of law specifying some other disposition thereof such as, e.g., devolution or
transmission of such powers, duties, functions, etc. to some other identified successor agency or
instrumentality of the RP.

When the expiring agency is an incorporated one, the consequences of such expiry must be looked for,
in the first instance, in the charter of that agency and, by way of supplementation, in the provisions of
the Corporation Code.

Since, in the instant case, ISA is a non-incorporated agency or instrumentality of the Republic, its
powers, duties, functions, assets and liabilities are properly regarded as folded back into GRP and hence
assumed once again by the Republic, no special statutory provision having been shown to have
mandated succession thereto by some other entity or agency of the Republic.

The principal or the real party in interest is thus the RP and not the NSC, even though the latter may be
an ultimate user of the properties involved should the condemnation suit be eventually successful.

From the foregoing premises, it follows that the RP is entitled to be substituted in the expropriation
proceedings as party-plaintiff in lieu of ISA, the statutory term of ISA having expired. Put a little
differently, the expiration of ISA’s statutory term did not by itself require or justify the dismissal of the
eminent domain proceedings.

In E.B. Marcha, the Court also stressed that to require the Republic to commence all over again another
proceeding, as the trial court and CA had required, was to generate unwarranted delay and create
needless repetition of proceedings:

NOTES:
1. Since, as we have held above, the powers and functions of ISA have reverted to the RP upon the
termination of the statutory term of ISA, the question should be addressed whether fresh legislative
authority is necessary before the RP may continue the expropriation proceedings initiated by its own
delegate or agent.

While the power of eminent domain is, in principle, vested primarily in the legislative department of the
government, we believe and so hold that no new legislative act is necessary should the Republic decide,
upon being substituted for ISA, in fact to continue to prosecute the expropriation proceedings. For the
legislative authority, a long time ago, enacted a continuing or standing delegation of authority to the
President of the Philippines to exercise, or cause the exercise of, the power of eminent domain on
behalf of the Government of the Republic of the Philippines. The 1917 Revised Administrative Code,
which was in effect at the time of the commencement of the present expropriation proceedings before
the Iligan RTC , provided that:

Sec. 64. Particular powers and duties of the President of the Philippines. – In addition to his general
supervisory authority, the President of the Philippines shall have such other specific powers and duties
as are expressly conferred or imposed on him by law, and also, in particular, the powers and duties set
forth in this Chapter.

Among such special powers and duties shall be: xx

(h) To determine when it is necessary or advantageous to exercise the right of eminent domain in behalf
of the Government of the Philippines; and to direct the Secretary of Justice, where such act is deemed
advisable, to cause the condemnation proceedings to be begun in the court having proper jurisdiction.
Xx

The Revised Administrative Code of 1987 currently in force has substantially reproduced the foregoing
provision in the following terms:

Sec. 12. Power of eminent domain. – The President shall determine when it is necessary or
advantageous to exercise the power of eminent domain in behalf of the National Government, and
direct the Solicitor General, whenever he deems the action advisable, to institute expopriation
proceedings in the proper court. (Emphasis supplied)

In the present case, the President, exercising the power duly delegated under both the 1917 and 1987
Revised Administrative Codes in effect made a determination that it was necessary and advantageous to
exercise the power of eminent domain in behalf of the Government of the Republic and accordingly
directed the SG to proceed with the suit. 17

2. It is argued by private respondent MCFC that, because Congress after becoming once more the
depository of primary legislative power, had not enacted a statute extending the term of ISA, such non-
enactment must be deemed a manifestation of a legislative design to discontinue or abort the present
expropriation suit. We find this argument much too speculative; it rests too much upon simple silence
on the part of Congress and casually disregards the existence of Section 12 of the 1987 Administrative
Code already quoted above.
3. Other contentions are made by private respondent MCFC, such as, that the constitutional
requirement of “public use” or “public purpose” is not present in the instant case, and that the
indispensable element of just compensation is also absent. We agree with the Court of Appeals in this
connection that these contentions, which were adopted and set out by the RTC in its order of dismissal,
are premature and are appropriately addressed in the proceedings before the trial court. Those
proceedings have yet to produce a decision on the merits, since trial was still on going at the time the
RTC precipitously dismissed the expropriation proceedings. Moreover, as a pragmatic matter, the
Republic is, by such substitution as party-plaintiff, accorded an opportunity to determine whether or
not, or to what extent, the proceedings should be continued in view of all the subsequent developments
in the iron and steel sector of the country including, though not limited to, the partial privatization of
the NSC

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

G.R. No. 120319

October 6, 1995

FACTS: From a submission agreement of the LDB and the Association of Luzon Development Bank
Employees (ALDBE) arose an arbitration case to resolve the following issue:

Whether or not the company has violated the CBA provision and the MOA on promotion.

At a conference, the parties agreed on the submission of their respective Position Papers. Atty. Garcia,
in her capacity as Voluntary Arbitrator, received ALDBE’s Position Paper ; LDB, on the other hand, failed
to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As
of May 23, 1995 no Position Paper had been filed by LDB.

Without LDB’s Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows:

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

Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.

ISSUE: WON a voluntary arbiter’s decision is appealable to the CA and not the SC

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

YES
The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite limited
compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the NLRC for
that matter. The “(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission …” Hence, while there is an express mode of appeal from the decision of a
labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision of a voluntary
arbitrator.

Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the SC itself on a petition for certiorari, in effect equating the voluntary arbitrator with the
NLRC or the CA. In the view of the Court, this is illogical and imposes an unnecessary burden upon it.

In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts and
awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the
awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same
legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., this Court
ruled that “a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity.” Under
these rulings, it follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law
the status of a quasi-judicial agency but independent of, and apart from, the NLRC since his decisions are
not appealable to the latter.

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

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of
RTC s and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and
Exchange Commission, the Employees Compensation Commission and the Civil Service Commission,
except those falling within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.

Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be
considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a “quasi-judicial instrumentality.”

An “instrumentality” is anything used as a means or agency. Thus, the terms governmental “agency” or
“instrumentality” are synonymous in the sense that either of them is a means by which a government
acts, or by which a certain government act or function is performed. The word “instrumentality,” with
respect to a state, contemplates an authority to which the state delegates governmental power for the
performance of a state function. An individual person, like an administrator or executor, is a judicial
instrumentality in the settling of an estate, in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court, and a trustee in bankruptcy of a defunct corporation
is an instrumentality of the state.

The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated
to him under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation
of the term “instrumentality” in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and
powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since
he is a quasi-judicial instrumentality as contemplated therein.

It will be noted that, although the Employees Compensation Commission is also provided for in the
Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative Circular No.
1-95, laid down the procedure for the appealability of its decisions to the CA under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129. A
fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the CA, in line with the procedure outlined in Revised Administrative Circular No. 1-95,
just like those of the quasi-judicial agencies, boards and commissions enumerated therein.

In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as
the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the RTC for the province or city in which one of the
parties resides or is doing business, or in which the arbitration is held, shall have jurisdiction.

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

NOTES:

1. In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding. Arbitration may be classified, on
the basis of the obligation on which it is based, as either compulsory or voluntary.

Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government
to forego their right to strike and are compelled to accept the resolution of their dispute through
arbitration by a third party. 1 The essence of arbitration remains since a resolution of a dispute is arrived
at by resort to a disinterested third party whose decision is final and binding on the parties, but in
compulsory arbitration, such a third party is normally appointed by the government.

Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to
a voluntary arbitration clause in their collective agreement, to an impartial third person for a final and
binding resolution. 2 Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by
both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration
as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to de
bound by said arbitrator’s decision.

2. Article 261 of the Labor Code accordingly provides for exclusive original jurisdiction of such voluntary
arbitrator or panel of arbitrators over
(1) the interpretation or implementation of the CBA and

(2) the interpretation or enforcement of company personnel policies.

Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over other
labor disputes.

On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following
enumerated cases:

. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality
of strikes and lockouts;

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
LEVERIZA et al vs. IAC, Mobil oil and CAA

G.R. No. L-66614

January 25, 1988

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

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

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

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

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

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

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

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

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

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

After trial, the lower courts rendered judgment:


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

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

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

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

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

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

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

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

YES

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

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

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

Paragraph 8 provides the sanction for the violation of the above-mentioned terms and conditions of the
contract. Said paragraph reads:
8. Failure on the part of the Party of the Second Part to comply with the terms and conditions herein
agreed upon shall be sufficient for revocation of this contract by the Party of the First Part without need
of judicial demand.

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

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

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

NOTES:

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

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

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

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

2. Petitioners likewise argued that it was contemplated by the parties to Contract “A” that Mobil Oil
would be the owner of the gasoline station it would construct on the leased premises during the period
of the lease, hence, it is understood that it must be given a right to use and occupy the lot in question in
the form of a sub-lease.
In Contract “A”, it was categorically stated that it is the lessee (petitioner) who will manage and operate
the gasoline station. The fact that Mobil Oil was mentioned in that contract was clearly not intended to
give approval to a sublease between petitioners and said company but rather to insure that in the
arrangements to be made between them, it must be understood that after the expiration of the lease
contract, whatever improvements have been constructed in the leased premises shall be relinquished to
CAA. Thus, this Court held that “the primary and elementary rule of construction of documents is that
when the words or language thereof is clear and plain or readily understandable by any ordinary reader
thereof, there is absolutely no room for interpretation or construction anymore.

3. <ADMINISTRATIVE LAW>Finally, petitioners contend that the administrator of CAA cannot execute
without approval of the Department Secretary, a valid contract of lease over real property owned by the
Republic of the Philippines, citing the Revised Administrative Code, which provide that Under 567 of the
Revised Administrative Code, such contract of lease must be executed:

(1) by the President of the Philippines, or

(2) by an officer duly designated by him or

(3) by an officer expressly vested by law.

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

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

xxx xxx xxx

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

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

It is readily apparent that in the case at bar, the CAA has the authority to enter into Contracts of Lease
for the government under the third category (Art. 567. )Thus, as correctly ruled by the Court of Appeals,
the CAA has the power to execute the deed or contract involving leases of real properties belonging to
the RP, not because it is an entity duly designated by the President but because the said authority to
execute the same is, by law expressly vested in it, which in this case is RA 776.
Under the above-cited Section 32 (par. 24) of Republic Act 776, the Administrator (Director) of the CAA
by reason of its creation and existence, administers properties belonging to the RP and it is on these
properties that the Administrator must exercise his vast power and discharge his duty to enter into,
make and execute contract of any kind with any person, firm, or public or private corporation or entity
and to acquire, hold, purchase, or lease any personal or real property, right of ways and easements
which may be proper or necessary. (The exception, however, is the sale of properties acquired by CAA or
any other real properties of the same which must have the approval of the President of the Philippines.)
The Court of appeals took cognizance of the striking absence of such proviso in the other transactions
contemplated in paragraph (24) and is convinced as we are, that the Director of the CAA does not need
the prior approval of the President or the Secretary of Public Works and Communications in the
execution of Contract “C.”

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

GR No. 86995 03 September 1992

Chartered Institution and GOCC, defined.

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

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

On December 12, 1988, the petitioners filed a complaint with the Iloilo RTC against the officers of PBAC
for their refusal without just cause to accept them resulting to their non-inclusion in the list of pre-
qualified bidders. They sought to the resetting of the December 12, 1988 bidding and the acceptance of
their documents. They also asked that if the bidding had already been conducted, the defendants be
directed not to award the project pending resolution of their complaint.

On the same date, Judge Lebaquin issued a restraining order prohibiting PBAC from conducting the
bidding and award the project. The defendants filed a motion to lift the restraining order on the ground
that the court is prohibited from issuing such order, preliminary injunction and preliminary mandatory
injunction in government infrastructure project under Sec. 1 of P.D. 1818. They also contended that the
preliminary injunction had become moot and academic as it was served after the bidding had been
awarded and closed.

On January 2, 1989, the trial court lifted the restraining order and denied the petition for preliminary
injunction. It declared that the building sought to be constructed at the ISCOF was an infrastructure
project of the government falling within the coverage of the subject law.

ISSUE: Whether or not ISCOF is a government instrumentality subject to the provisions of PD 1818?

RULING: The 1987 Administrative Code defines a government instrumentality as follows:

Instrumentality refers to any agency of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually through a charter. This
term includes regulatory agencies, chartered institutions, and government-owned or controlled
corporations. (Sec. 2 (5) Introductory Provisions).
The same Code describes a chartered institution thus:

Chartered institution - refers to any agency organized or operating under a special charter, and vested
by law with functions relating to specific constitutional policies or objectives. This term includes the
state universities and colleges, and the monetary authority of the state. (Sec. 2 (12) Introductory
Provisions).

It is clear from the above definitions that ISCOF is a chartered institution and is therefore covered by
P.D. 1818.

There are also indications in its charter that ISCOF is a government instrumentality. First, it was created
in pursuance of the integrated fisheries development policy of the State, a priority program of the
government to effect the socio-economic life of the nation. Second, the Treasurer of the Republic of the
Philippines shall also be the ex-officio Treasurer of the state college with its accounts and expenses to be
audited by the Commission on Audit or its duly authorized representative. Third, heads of bureaus and
offices of the National Government are authorized to loan or transfer to it, upon request of the
president of the state college, such apparatus, equipment, or supplies and even the services of such
employees as can be spared without serious detriment to public service. Lastly, an additional amount of
P1.5M had been appropriated out of the funds of the National Treasury and it was also decreed in its
charter that the funds and maintenance of the state college would henceforth be included in the
General Appropriations Law.

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

G.R. No. 103982

December 11, 1992

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

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

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

xxx xxx xxx

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

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

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

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

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

Eventually, petitioner’s claim was returned by Undersecretary of Justice Montenegro to Director Lim
with the advice that petitioner “elevate the matter to the Supreme Court if he so desires”.

Hence this petition for certiorari.

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

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

NO

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

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

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

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

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

There are two categories of repeal by implication.

Where provisions in the two acts on the same subject matter are in an irreconcilable conflict, the later
act to the extent of the conflict constitutes an implied repeal of the earlier one.

2. If the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will
operate to repeal the earlier law.

Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover the
entire subject matter of the old Code. There are several matters treated in the old Code which are not
found in the new Code, such as the provisions on notaries public, the leave law, the public bonding law,
military reservations, claims for sickness benefits under Section 699, and still others.
According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to cover
only those aspects of government that pertain to administration, organization and procedure,
understandably because of the many changes that transpired in the government structure since the
enactment of the RAC decades of years ago.

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

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

NOTES:

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

WHEREAS, the effectiveness of the Government will be enhanced by a new Administrative Code which
incorporate in a unified document the major structural, functional and procedural principles and rules of
governance; and

xxx xxx xxx

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

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

2. Regarding COA contention that recovery under this subject section (699) shall bar the recovery of
benefits under the Employees’ Compensation Program, the same cannot be upheld. The second
sentence of Article 173, Chapter II, Title II (dealing on Employees’ Compensation and State Insurance
Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly provides that “the payment of
compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of the
Revised Administrative Code . . . whose benefits are administered by the system (meaning SSS or GSIS)
or by other agencies of the government.”
Preclaro vs Sandiganbayan, 247 SCRA 454

(Public Officers, Non-Career Service)

Facts: Accused is a project manager/consultant of the Chemical Mineral Division, Industrial Technology
Development Institute, Department of Science and Technology, a component of the Industrial
Development Institute which is an agency of the DOST.

He is to supervise the construction of the ITDI-CMD building, while the Jaime Sta. Maria Construction
undertook the construction. The structure is jointly funded by the Philippine and Japanese
Governments.

While the said construction has not yet been completed, accused either directly requested and/or
demanded for himself the sum of P200,000.00, claimed as part of the expected profit of the contractor.

Petitioner was charged for violation of the Anti-Graft and Corrupt Practices Act for committing said
offense in relation to the performance of his official duties.

Petitioner asserts in a petition for review that he is not a public officer because he was neither elected
nor appointed to a public office, but merely a private individual hired by the ITDI on contractual basis for
a particular project and for a specified period. Hence the Sandiganbayan erred in taking cognizance of
the case.

Section 2 (b) of RA 3019 defines a public officer to “include elective and appointive officials and
employees, permanent or temporary, whether in the classified or unclassified or exemption service
receiving compensation, even nominal, from the government…”

Issue: WON a private individual hired on a contractual basis by the government is a public officer.

Held: Yes. The word “includes” used in defining a public officer indicates that the definition is not
restrictive. The terms “classified, unclassified or exemption service” were the old categories of position
in the civil service which have been reclassified into Career Service and Non-Career Service by PD 807
providing for the organization of the Civil Service Commission by the Administrative Code of 1987.

A private individual hired on a contractual basis as Project Manager for a government undertaking falls
under the non-career service category of the Civil Service and thus is a public officer as defined by Sec
2(b) of RA 3019.

Under Book V, Title I, Subtitle A, Chapter 2, Sec 6(2) of the Administrative Code of 1987, non-career
service in particular is characterized by 1) entrance other than those of the usual test of merit and
fitness utilized for the career service; and 2) tenure which is limited to a period specified by law, or
which is coterminous with that of the appointing authority or subject to his pleasure, or which is limited
to the duration of a particular project for which purpose employment was made.

Section 9(4) of the same provides that Non-Career Service It shall include Contractual personnel or those
employment in the government is in accordance with a special contract to undertake a specific work or
job, requiring special or technical skills not available in the employing agency, to be accomplished within
a specific period, which in no case shall exceed one year, and performs or accomplishes the specific
work or job, under his own responsibility with a minimum of direction and supervision from the hiring
agency.