CASES 1- 28 . SAT.

RECIT

1. Aratuc vs. COMELEC

88 SCRA 251

FACTS:
Election for the position of Representative to the Batasang Pambansa were held throughout the
Philippines.
Tomatic Aratuc sought the suspension of the canvassin Cotabato City
A Supervening Panel conducted the hearings on the alleged irregularities in the election records

the Regional Board of Canvassers declaed all the eight Kilusan ng Bagong Lipunan candidates elected.
Appeal was taken by the Konsaensya ng Bayan candidates to the Comelec.

ISSUE:
Whether or not respondent Comelec has committed grave abuse of discretion, amounting to lack of
jurisdiction.

HELD:
No. As the Superior administrative body having control over boards of canvassers, the Comelec may
review the actuations of the Regional Board of Canvassers, such as by extending its inquiry beyond the
election records of the voting centers in questions. The authority of the Commission is in reviewing such
actuations does not spring from any appellant jurisdiction conferred by any provisions of the law, for
there is none such provision anywhere in the election Code, but from the plenary prerogative of direct
control and supervision endowed to it by the provisions in Section 168. And in administrative law, it is a
too well settled postulate to need any supporting citation here, that a superior body or office having
supervision and control over another may do directly what the latter is supposed to do or ought to have
done.

2. Maceda vs. Energy Regulatory Board

192 SCRA 363

FACTS:

Private respondents filed an application for oil price increase was granted by public no. the provisional
increase. On December 18, 1990 the court dismissed the petition and reaffirm ERB’s provisional increase
without hearing pursuant to Sec. 8 of E.O no. 172. Prior to the issuance of said order, a hearing was
conducted but the petitioner failed to appear at said hearing .The petitioner contends that the provisional
increase in the prices of petroleum violated due process for having been issued without notice and
hearing.

ISSUE:

Whether or not ERB orders granting provisional oil increase without prior notice is valid.

HELD:

Yes, it is valid. While E. O 172, a hearing is indispensable, it does not preclude the board from ordering
ex-parte, a provisional increase, subject to final disposition of whether or not: to make it permanent; to
reduce or increase it further; to deny the application. Sec. 3, par. e is akin to temporary restraining order.
It outlines the jurisdiction of the grounds for which it may decree a price adjustment, subject of notice and
hearing. However, under Sec. 8, it may order the price increase provisionally, without need of hearing,
subject to final outcome of the proceeding. The Board is not prevented from conducting a hearing on the
grant of provisional authority, however, it cannot be stigmatized later if it failed to conduct one.

3. Malaga vs Penachos, Jr.

213 SCRA 516

FACTS:

The Iloilo State College of Fisheries (ISCOF) through its Pre-qualification, Bids and Awards Committee
(PBAC) through its Pre-qualifications, Bids and Awards Committee (PBAC) caused the publication of 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. 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. 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.

HELD:

Yes, 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 includes
regulatory agencies, chartered institutions, and GOCC’s. 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 includes state
universities and colleges, and the monetary authority of the state. It is clear from the above definitions
that ISCOF is a chartered institution and is therefore covered by PD 1818. HOWEVER, it is apparent that
the present controversy did not arise from the discretionary acts of the administrative body nor does it
involve merely technical matters. What is involved here is non-compliance with the procedural rules on
bidding which required strict observance. PD 1818 was not intended to shield from judicial scrutiny
irregularities committed by administrative agencies such as the anomalies in the present case. Hence, the
challenged restraining order was not improperly issued by the respondent judge and the writ of
preliminary injunction should not have been denied.

4. United Resident of Dominican Hills vs. Commission on the Settlement of Land

Problems

353 SCRA 782

FACTS:

The Dominican Hills was mortgaged to the United Coconut Planters Bank (UCPB) which eventually
foreclosed the mortgage thereon and acquired the same as highest bidder. It was then donated to the
Republic of the Philippines by UCPB through its President, Eduardo Cojuangco. The deed of donation
stipulated that Dominican Hills would be utilized for the "priority programs, projects, activities in human
settlements and economic development and governmental purposes" of the Ministry of Human
Settlements. On December 12, 1986, then President Corazon Aquino issued EO 85 abolishing the
Ministry of Human Settlements. All agencies under the its supervision as well as all its assets, programs
and projects, were transferred to the Presidential Management Staff (PMS). The United (Dominican Hills)
submitted its application before the PMS to acquire a portion of the Dominican Hills property. In a
MOA, PMS and United agreed that the latter may purchase a portion of the said property from Home
Insurance Guaranty Corporation. Thus, HIGC sold 2.48 hectares of the property to UNITED. Petitioner
alleges that sometime in 1993, private respondents entered the Dominican Hills property allocated to
UNITED and constructed houses thereon. Petitioner was able to secure a demolition order from the city
mayor. Unable to stop the razing of their houses, private respondents, under the name DOMINICAN
HILL BAGUIO RESIDENTS HOMELESS ASSOCIATION (ASSOCIATION, for brevity) filed an
action for injunction before RTC Baguio City. Private respondents were able to obtain a temporary
restraining order but their prayer for a writ of preliminary injunction was later denied. The
ASSOCIATION filed a separate civil case for damages, injunction and annulment of the said MOA. It
was later on dismissed upon motion of United. The said Order of dismissal is currently on appeal with the
CA. The demolition order was subsequently implemented by the Office of the City Mayor and the City
Engineer's Office of Baguio City. However, petitioner avers that private respondents returned and
reconstructed the demolished structures. To forestall the re-implementation of the demolition order,
private respondents filed a petition for annulment of contracts with prayer for a temporary restraining
order before the Commission on the Settlement of Land Problems (COSLAP) against petitioners. On the
very same day, public respondent COSLAP issued the contested order requiring the parties to maintain
the status quo. Without filing a motion for reconsideration from the aforesaid status quo order, petitioner
filed the instant petition questioning the jurisdiction of the COSLAP.

ISSUE:

Whether or not COSLAP has the power to hear and try a petition for annulment of contracts with prayer
for a TRO and to issue a status quo order and conduct a hearing thereof.

HELD:

No. COSLAP is not justified in assuming jurisdiction over the controversy. It discharges quasi-judicial
functions. A "Quasi-judicial function" is a term which applies to the actions, discretion, etc. of public
administrative officers or bodies, who are required to investigate facts, or ascertain the existence of facts,
hold hearings, and draw conclusions from them, as a basis for their official action and to exercise
discretion of a judicial nature." However, it does not depart from its basic nature as an administrative
agency, albeit one that exercises quasi-judicial functions. Still, administrative agencies are not considered
courts; they are neither part of the judicial system nor are they deemed judicial tribunals. The doctrine of
separation of powers observed in our system of government reposes the three (3) great powers into its
three (3) branches — the legislative, the executive, and the judiciary — each department being co-equal
and coordinate, and supreme in its own sphere. Accordingly, the executive department may not, by its
own fiat, impose the judgment of one of its own agencies, upon the judiciary. Indeed, under the expanded
jurisdiction of the Supreme Court, it is empowered "to determine whether or not there has been grave
abuse of discretion amounting to lack of or excess of jurisdiction on the part of any branch or
instrumentality of the Government."

5. ANAK VS. THE EXECUTIVE SECRETARY

G.R. NO. 16605 |AUGUST 29, 2007

FACTS
Petitioners assail the constitutionality of E.O. Nos. 364 and 379, both issued in 2004, via the present
Petition for Certiorari and Prohibition with prayer for injunctive relief.

EXECUTIVE ORDER NO. 364

TRANSFORMING THE DEPARTMENT OF AGRARIAN REFORM INTO THE DEPARTMENT OF
LAND REFORM
xxx
SECTION 1. The Department of Agrarian Reform is hereby transformed into the Department of Land
Reform. xxx
SECTION 2. The Presidential Commission for the Urban Poor (PCUP) is hereby placed under the
supervision and control of the Department of Land Reform. xxx
SECTION 3. The NCIP is hereby placed under the supervision and control of the Department of Land
Reform.
xxx

E.O. No. 379, which amended E.O. No. 364 a month later or on October 26, 2004, reads:
 EXECUTIVE ORDER NO. 379
AMENDING EXECUTIVE ORDER NO. 364 ENTITLED TRANSFORMING THE DEPARTMENT OF
AGRARIAN REFORM INTO THE DEPARTMENT OF LAND REFORM
xxx
"Section 3. The National Commission on Indigenous Peoples (NCIP) shall be an attached agency of the
Department of Land Reform."
xxx

Petitioners contend that the two presidential issuances are unconstitutional for violating:
- the constitutional principles of separation of powers and of the rule of law;
- the constitutional scheme and policies for agrarian reform, urban land reform, indigenous
peoples’ rights and ancestral domain; and
- the constitutional right of the people and their organizations to effective and reasonable
participation in decision-making, including through adequate consultation.

The issue on the transformation of DAR into DLR became moot and academic, however, the department
having reverted to its former name by virtue of E.O. No. 456 which was issued on August 23, 2005.

ISSUE
W.O.N placing the Presidential Commission for the Urban Poor (PCUP) under the supervision and
control of the DAR, and the National Commission on Indigenous Peoples (NCIP) under the DAR as an
attached agency is unconstitutional.

RULING
AMIN charges the Executive Department with transgression of the principle of separation of powers.

AMIN contends that since the DAR, PCUP and NCIP were created by statutes, 20 they can only be
transformed, merged or attached by statutes, not by mere executive orders.

In fine, AMIN contends that any reorganization of these administrative agencies should be the subject of
a statute.

AMIN’s position fails to impress.

The Constitution confers, by express provision, the power of control over executive departments, bureaus
and offices in the President alone.

The Constitution’s express grant of the power of control in the President justifies an executive action to
carry out reorganization measures under a broad authority of law. 26

As far as bureaus, agencies or offices in the executive department are concerned, the power of control
may justify the President to deactivate the functions of a particular office. A law may expressly grant the
President the broad authority to carry out reorganization measures. 29 The Administrative Code of 1987 is
one such law:

SEC. 30. Functions of Agencies under the Office of the President.– Agencies under the Office of the
President shall continue to operate and function in accordance with their respective charters or laws
creating them, except as otherwise provided in this Code or by law.

SEC. 31. Continuing Authority of the President to Reorganize his Office.– The President, subject to the
policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have
continuing authority to reorganize the administrative structure of the Office of the President. For this
purpose, he may take any of the following actions:
(1) Restructure the internal organization of the Office of the President Proper, including the
immediate Offices, the Presidential Special Assistants/Advisers System and the Common Staff
Support System, by abolishing, consolidating, or merging units thereof or transferring functions
from one unit to another;
(2) Transfer any function under the Office of the President to any other Department or Agency as
well as transfer functions to the Office of the President from other Departments and Agencies;
and
(3) Transfer any agency under the Office of the President to any other department or agency as
well as transfer agencies to the Office of the President from other departments or agencies.

The Administrative Code of 1987 merely underscores the need to provide the President with suitable
solutions to situations on hand to meet the exigencies of the service that may call for the exercise of the
power of control.
x x x The law grants the President this power in recognition of the recurring need of every President to
reorganize his office "to achieve simplicity, economy and efficiency."
As thus provided by law, the President may transfer any agency under the Office of the President to any
other department or agency, subject to the policy in the Executive Office and in order to achieve
simplicity, economy and efficiency.

WHEREFORE, the petition is DISMISSED. Executive Order Nos. 364 and 379 issued on September 27,
2004 and October 26, 2004, respectively, are declared not unconstitutional.
 6. FIDENCIO Y. BEJA, SR., PETITIONER, VS. COURT OF APPEALS,

G.R. NO. 97149 | MARCH 31, 1992

FACTS
On October 21,1988, the General Manager, Rogelio A. Dayan filed administrative case against Beja Sr.
and Villaluz for grave dishonesty. After preliminary investigation conducted by the district attorney for
region X, administrative case no. 11-04-88 was considered closed for lack of merit. On December 13,
1988 another administrative case was filed against Beja by the PPA manager also for dishonesty and
grave misconduct. The case was re-docketed as administrative case no. PPA-AAB-1-049-89 and
thereafter, the PPA indorsed it to the AAB for appropriate action. On February 20, 1989, Beja filed
petition for certiorari with preliminary injunction before the Regional Trial Court of Misamis Oriental.
Two days later, he filed with the ABB a manifestation and motion to suspend the hearing
of administrative case no. PPA-AAB-1-049-89 on account of the pendency of the certiorari
proceeding before the court. AAB denied the motion and continued with the hearing of the administrative
case

ISSUE
Whether or not the Administrative Action Board of DOTC has jurisdiction over
administrative cases involving personnel below the rank of Assistant General Manager of the Philippine
Ports Authority, an attached agency of DOTC.

RULING
The Court qualifiedly rules in favor of the petitioner. The PPA was created through PD no. 505 dated July
1974. Under the Law, the corporate powers of the PPA were vested in a governing Board of Directors
known as the Philippine Ports Authority Council. Sec. 5(i) of the same decree gave the council the power
“to appoint, discipline and remove, and determine the composition of the technical staff of the
authority and other personnel”. On December 23, 1975, PD no. 505 was substituted by PD no. 857
sec. 4(a) thereof created the Philippine Ports Authority which would be attached to the then Department
of Public Works, Transportation and Communication. When Executive order no. 125 dated January 30,
1987 reorganizing the Ministry of Transportation and Communication was issued, the PPA retained its
attached status.

Administrative Code of 1987 classified PPA as an attached agency to the DOTC. An attached agency has
a larger measure of independence from the Department to which it is attached than one which
is under departmental supervision and control or administrative supervision. This is borne out by the
“lateral relationship” between the Department and the attached agency. The attachment is
merely for policy and program coordination.” With respect to administrative matters, the
independence of an attached agency from the department control and supervision is furthermore
reinforced by the fact that even an agency under a Department’s administrative supervision is free from
Departmental interference with respect to appointments and other personnel actions “ in
accordance with the decentralization of personnel functions” under the administrative Code
of 1987.

The Decision of the Court of Appeal is AFFIRMED as so far as it upholds the power of the PPA General
Manager to subject petitioner to preventive suspension and REVERSED insofar as it
validates the jurisdiction of the DOTC and/or the AAB to act on administrative case no. PPA –AAB-1-
049-89. The AAB decision in said cased is hereby declared NULL and VOID and the
case is REMANDED to the PPA whose General Manager shall conduct with dispatch its reinvestigation.
 7. MANILA INTERNATIONAL AIRPORT AUTHORITY VS.CITY OF PASAY

G.R. NO. 163072 | APRIL 2, 2009

FACTS
On 28 August 2001, MIAA received Final Notices of Real Property Tax Delinquency from the City of
Pasay for the taxable years 1992 to 2001. MIAA’s real property tax delinquency for its real properties
located in NAIA Complex amounts to ₱1,016,213,836.33

On 24 August 2001, the City of Pasay, through its City Treasurer, issued notices of levy and warrants of
levy for the NAIA Pasay properties.

On 29 October 2001, MIAA filed with the Court of Appeals a petition for prohibition and injunction with
prayer for preliminary injunction or temporary restraining order, to enjoin the City of Pasay from
imposing real property taxes on, levying against, and auctioning for public sale the NAIA Pasay
properties. On 30 October 2002, the Court of Appeals dismissed the petition.

ISSUE
The issue raised in this petition is whether the NAIA Pasay properties of MIAA are exempt from real
property tax.

RULING
The petition is meritorious.
The Court of Appeals held that as a government-owned corporation, MIAA’s tax exemption under
Section 21 of EO 903 has already been withdrawn upon the effectivity of the Local Government Code in
1992. In Manila International Airport Authority v. Court of Appeals6 (2006 MIAA case), this Court
already resolved the issue of whether the airport lands and buildings of MIAA are exempt from tax under
existing laws. In the 2006 MIAA case, this Court held:

To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of the
Introductory Provisions of the Administrative Code because it is not organized as a stock or non-stock
corporation. Neither is MIAA a government-owned or controlled corporation under Section 16, Article
XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability. MIAA
is a government instrumentality vested with corporate powers and performing essential public services
pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a government
instrumentality, MIAA is not subject to any kind of tax by local governments under Section 133(o) of the
Local Government Code.

Thus, MIAA is not a government-owned or controlled corporation but a government instrumentality

which is exempt from any kind of tax from the local governments. MIAA is not liable to pay real property
tax for the NAIA Pasay properties.
Furthermore, the airport lands and buildings of MIAA are properties of public dominion intended for
public use, and as such are exempt from real property tax under Section 234(a) of the Local Government
Code.

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 30 October 2002 and the
Resolution dated 19 March 2004 of the Court of Appeals in CA-G.R. SP No. 67416. We DECLARE the
NAIA Pasay properties of the Manila International Airport Authority EXEMPT from real property tax
imposed by the City of Pasay.
 8. UNIVERSITY OF THE PHILIPPINES VS. HON. AGUSTIN S. DIZON

G.R. NO. 171182 | AUGUST 23, 2012

FACTS
University of the Philippines (UP) entered into a General Construction Agreement with respondent Stern
Builders Corporation (Stern Builders) for the construction and renovation of the buildings in the campus
of the UP in Los Bas. UP was able to pay its first and second billing. However, the third billing worth
P273,729.47 was not paid due to its disallowance by the Commission on Audit (COA).

On November 28, 2001, the RTC rendered its decision ordering UP to pay Stern Builders.

On appeal, both the CA and the High Court denied UPs petition. The denial became final and executory.
Stern Builders filed in the RTC its motion for execution. The RTC granted another motion for execution
filed on May 9, 2003. The sheriff served notices of garnishment to the UPs depositary banks and the RTC
ordered the release of the funds.

ISSUE
Was UP's funds validly garnished?

RULING
UP's funds, being government funds, are not subject to garnishment.

Despite its establishment as a body corporate, the UP remains to be a " chartered institution"
performing a legitimate government function. Irrefragably, the UP is a government instrumentality,
performing the States constitutional mandate of promoting quality and accessible education. As a
government instrumentality, the UP administers special funds sourced from the fees and income
enumerated under Act No. 1870 and Section 1 of Executive Order No. 714, and from the yearly
appropriations, to achieve the purposes laid down by Section 2 of Act 1870, as expanded in Republic Act
No. 9500. The funds of the UP are government funds that are public in character.

The Constitution strictly mandated that "no money shall be paid out of the Treasury except in pursuance
of an appropriation made by law." The execution of the monetary judgment against the UP was within the
primary jurisdiction of the COA. It was of no moment that a final and executory decision already
validated the claim against the UP.

Main points cases 9-12

A GOCC must be owned by the government, and in the case of:

- stock corporation, at least a majority of its capital stock must be owned by the government.

- non-stock corporation, by analogy at least a majority of the members must be government officials
holding such membership by appointment or designation by the government.

Congress to create GOCCs through special charters on two conditions:

1) the GOCC must be established for the common good;

2) the GOCC must meet the test of economic viability. (economic / commercial activities)

9.

Manila International Airport Authority vs, CA

GR No. 155650, July 20, 2006

Facts:

Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino
International Airport (NAIA) complex in Parañaque City under Executive Order No. 9303, otherwise
known as the revised charter of the MIAA. EO 903 was issued on July 21, 1983 by then President
Ferdinand E. Marcos. Subsequently EO 909 and 298 amended the MIAA charter as operator of the
international airport. The MIAA charter provides that no portion of the land transferred to MIAA shall be
disposed of through sale or any other mode unless specifically approved by the President of the
Philippines.

On March 21, 1997, the Office of the Government Corporate Counsel issued opinion no. 061.
The OGCC opined that the local government code of 1991 withdraw the exemption from real estate tax
granted to MIAA under section 21 of the MIAA charter.

Thus, MIAA negotiated with respondent city of Parañaque to pay the real estate tax imposed by
the city. MIAA then paid some of the real estate tax already due. On July 17, 2001, the City of Parañaque,
through its city treasurer issued notices of levy and warrants of levy on the airport lands and buildings.
The mayor of the city of Parañaque threatened to sell at public auction the airport lands and buildings
should MIAA fail to pay the real estate tax delinquency, which they did. MIAA sought for a Temporary
Restraining Order from the CA but failed to do so within the 60 days reglementary period, so the petition
was dismissed. MIAA then sought for the TRO with the Supreme Court a day before the public auction,
MIAA was granted with the TRO but unfortunately the TRO was received by the Paranaque City officers
3 hours after the public auction.

MIAA claims that although the charter provides that the title of the land and building are with
MIAA still the ownership is with the Republic of the Philippines. MIAA also contends that it is an
instrumentality of the government and as such exempted from real estate tax. On the other hand, the
officials of Paranaque City claim that MIAA is a government owned and controlled corporation therefore
not exempted to real estate tax.

Issue:

Whether or not MIAA is an instrumentality of the government and not a government owned and
controlled corporation and as such exempted from tax.

Held:
 MIAA is a government instrumentality vested with corporate powers to perform efficiently
its governmental functions. MIAA is like any other government instrumentality, the only difference is
that MIAA is vested with corporate powers. Section 2(10) of the Introductory Provisions of the
Administrative Code defines a government “instrumentality” as follows:

SEC. 2. (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.

When the law vests in a government instrumentality corporate powers, the instrumentality does
not become a corporation. Unless the government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only governmental but also corporate
powers. Thus, MIAA exercises the governmental powers of eminent domain, police authority and the
levying of fees and charges. At the same time, MIAA exercises "all the powers of a corporation under the
Corporation Law, insofar as these powers are not inconsistent with the provisions of the Executive
Order."

Likewise, when the law makes a government instrumentality operationally autonomous, the
instrumentality remains part of the National Government machinery although not integrated with the
department framework. The MIAA Charter expressly states that transforming MIAA into a "separate and
autonomous body" will make its operation more "financially viable."

To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13)

of the Introductory Provisions of the Administrative Code because it is not organized as a stock or non-
stock corporation. Neither is MIAA a government-owned or controlled corporation under Section 16,
Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability.
MIAA is a government instrumentality vested with corporate powers and performing essential public
services pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a
government instrumentality, MIAA is not subject to any kind of tax by local governments under Section
133(o) of the Local Government Code.

Many government instrumentalities are vested with corporate powers but they do not become
stock or non-stock corporations, which is a necessary condition before an agency or instrumentality is
deemed a government-owned or controlled corporation. Examples are the Mactan International Airport
Authority, the Philippine Ports Authority, the University of the Philippines and Bangko Sentral ng
Pilipinas. All these government instrumentalities exercise corporate powers but they are not organized as
stock or non-stock corporations as required by Section 2(13) of the Introductory Provisions of the
Administrative Code. These government instrumentalities are sometimes loosely called government
corporate entities. However, they are not government-owned or controlled corporations in the strict sense
as understood under the Administrative Code, which is the governing law defining the legal relationship
and status of government entities.

WHEREFORE, the petition is granted. The assailed Resolutions of the Court of Appeals of 5
October 2001 and 27 September 2002 in CA-G.R. SP No. 66878 is set aside.
 10.

LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC, vs. UNIVERSITY OF THE

PHILIPPINES, Respondent.

G.R. No. 185918, April 18, 2012

Facts:

Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a contract for
security services with respondent University of the Philippines (UP).

In 1998, several security guards assigned to UP filed separate complaints against Lockheed and
UP for payment of underpaid wages, 25% overtime pay, premium pay for rest days and special holidays,
holiday pay, service incentive leave pay, night shift differentials, 13th month pay, refund of cash bond,
refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31,
1998, and attorneys fees.

The LA held Lockheed and UP as solidarily liable to complainants. As the parties did not appeal
the NLRC decision, the same became final and executory. A writ of execution was then issued but later
quashed by the Labor Arbiter upon motion of UP due to disputes regarding the amount of the award.
Later, however, said order quashing the writ was reversed by the NLRC.

The NLRC order and resolution having become final, Lockheed filed a motion for the issuance of
an alias writ of execution which was subsequently granted. A Notice of Garnishment was issued to
Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the award.

UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being subjected
to garnishment at PNB are government/public funds. The Labor Arbiter, however, dismissed the urgent
motion for lack of merit. UP filed a petition for certiorari before the CA. The CA held that although the
subject funds do not constitute public funds, in light of the ruling in the case of National Electrification
Administration v. Morales mandates that all money claims against the government must first be filed with
the Commission on Audit (COA).

Lockheed contends that UP has its own separate and distinct juridical entity from the national
government and has its own charter. Thus, it can be sued and be held liable. Lockheed likewise argues
that the rulings in the NEA is inapplicable. It contends that UP is not similarly situated with NEA because
the jurisdiction of COA over the accounts of UP is only on a post-audit basis. Hence, this petition.

Issue:

Whether or not respondent is a government entity with a separate and distinct personality from
the national government and has its own charter granting it the right to be sued making it possible for it to
be held liable and execution will thus ensue.

Held:

The CA correctly applied the NEA case. Like NEA, UP is a juridical personality separate and
distinct from the government and has the capacity to sue and be sued. Thus, also like NEA, it cannot
evade execution, and its funds may be subject to garnishment or levy. However, before execution may be
had, a claim for payment of the judgment award must first be filed with the COA. Under Commonwealth
Act No. 327, as amended by Section 26 of P.D. No. 1445, it is the COA which has primary jurisdiction to
examine, audit and settle “all debts and claims of any sort” due from or owing the Government or any of
its subdivisions, agencies and instrumentalities, including government-owned or controlled corporations
and their subsidiaries. With respect to money claims arising from the implementation of Republic Act
No. 6758, their allowance or disallowance is for COA to decide, subject only to the remedy of appeal by
petition for certiorari to this Court.

The Court cannot subscribe to Lockheed’s argument that NEA is not similarly situated with UP
because the COA’s jurisdiction over the latter is only on post-audit basis. A reading of the pertinent
Commonwealth Act provision clearly shows that it does not make any distinction as to which of the
government subdivisions, agencies and instrumentalities, including government-owned or controlled
corporations and their subsidiaries whose debts should be filed before the COA.
 UP is likewise been considered a government instrumentality performing states constitutional
mandate of promoting quality and accessible education ,which ranks with MIAA , a government
instrumentality exercising corporate powers but not organized as a stock or non-stock corporation, while
said corporation are government instrumentalities, they are loosely called government corporate entities
but not GOCC in the strict sense.

Petition is denied.

11.

Liban v. Gordon

G.R. 175352 , July 15, 2009

FACTS:

Dante V. Liban, together with other petitioners, petitioned in Court to declare Richard J. Gordon
as “having forfeited his seat in the Senate.” The petitioners were officers of the Board of Directors of the
Quezon City Red Cross Chapter, while respondent is Chairman of the Philippine National Red Cross
(PNRC) Board of Governors.

During Gordon’s incumbency as a member of the Senate of the Philippines, he was elected Chairman of
the PNRC during the February 23, 2006 meeting of the PNRC Board of Governors, in which the
petitioners alleged that by accepting the responsibility, Gordon deemed ceased to be a member of the
Senate as provided in Sec. 13, Article VI of the Constitution:

Sec. 13. No Senator or Member of the House of Representatives may hold any other office or
employment in the Government, or any subdivision, agency, or instrumentality thereof, including
government-owned or controlled corporations or their subsidiaries, during his term without forfeiting his
seat.

Respondent contested that the petitioners’ citation of a constitutional provision had no basis, since PNRC
is not a government-owned or controlled corporation. Thus, prohibition under Sec. 13, Art. VI of the
Constitution did not apply to his case. Furthermore, service rendered in PNRC is a volunteer service to
which is neither an office nor an employment.

ISSUE:

Whether the office of PNRC Chair is a government office or an office in GOCC.

HELD:

No. The Philippine National Red Cross is a private organization performing public functions.

The following are proof that the PNRC is not a GOCC:

(1) The PNRC does not have government assets and does not receive any appropriation from Congress.
The PNRC is financed primarily by private contributions.

(2) The PNRC is not controlled by the government. Under its Charter, only 6 of the 30 members of the
Board of Governors are appointed by the President (of the 24 remaining, 18 are elected by the chapter
delegates of the PNRC and the other 6 are elected by the 24 members already chosen). The PNRC Board
of Governors elects the Chairman and all its other officers. Gordon was elected, as all PNRC Chairmen
are elected, by a private sector-controlled PNRC Board
(3) The PNRC Chairman is neither appointed by the President nor by the head of any department, agency,
commission or board of the Executive, Judicial or Legislative branches. Hence, the PNRC Chairman is
not an official or employee of the Philippine Government. Not being a government official or employee,
the PNRC Chairman, as such, does not hold a government office or employment.

(4) The PNRC board’s decisions or actions are not reviewable by the President. Neither can the President
reverse or modify the decisions or actions of the Chairman, it is the Board that can review, reverse or
modify the decisions or actions of the Chairman. This proves again that the office of the Chairman is a
private office, not a government office.

A GOCC must be owned by the government, and in the case of a stock corporation, at least a
majority of its capital stock must be owned by the government. In the case of a non-stock corporation,
by analogy at least a majority of the members must be government officials holding such membership by
appointment or designation by the government. Under this criterion, and as discussed earlier, the
government does not own or control PNRC.

Apart from that, PNRC must not only be, but must also be seen to be, autonomous, neutral and
independent to be able to conduct its activities in accord to their fundamental principles of humanity,
impartiality, neutrality, independence, voluntary service, unity, and universality.

WHEREFORE, we declare that the office of the Chairman of the Philippine National Red Cross is not a
government office or an office in a government-owned or controlled corporation for purposes of the
prohibition in Section 13, Article VI of the 1987 Constitution. We also declare that Sections 1, 2, 3, 4(a),
5, 6, 7, 8, 9, 10, 11, 12, and 13 of the Charter of the Philippine National Red Cross, or Republic Act No.
95, as amended by Presidential Decree Nos. 1264 and 1643, are VOID because they create the PNRC as a
private corporation or grant it corporate powers.

12.

REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE RECLAMATION

AUTHORITY (PRA),
vs.
CITY OF PARANAQUE

G.R. No. 191109 , July 18, 2012

 Facts:

This is a petition for review on certiorari assailing the Order of the Regional Trial Court, Branch
195, Paranaque City (RTC), which ruled that petitioner Philippine Reclamation Authority (PRA) is
a government-owned and controlled corporation (GOCC), a taxable entity, and, therefore, not exempt
from payment of real property taxes.
 
The Public Estates Authority (PEA) is a government corporation created by virtue of P.D. No.
1084 to provide a coordinated, economical and efficient reclamation of lands, and the administration and
operation of lands belonging to, managed and/or operated by, the government with the object of
maximizing their utilization and hastening their development consistent with public interest. 

On October 26, 2004, then President Gloria Macapagal-Arroyo issued E.O. No. 380 transforming
PEA into PRA, which shall perform all the powers and functions of the PEA relating to reclamation
activities.

 
By virtue of its mandate, PRA reclaimed several portions of the foreshore and offshore areas of
Manila Bay, including those located in Parañaque City. Parañaque City Treasurer issued Warrants of
Levy on PRA’s reclaimed properties based on the assessment for delinquent real property for tax years
2001 and 2002. 

PRA claimed that it is not a GOCC under the Administrative Code, nor is it a GOCC under
Section 16, Article XII of the 1987Constitution because it is not required to meet the test of economic
viability.

It is a government instrumentality vested with corporate powers and performing an essential

public service. It insists that it may not be classified as a non-stock corporation because it has no members
and it is not organized for charitable, religious, educational, professional, cultural, recreational, fraternal,
literary, scientific, social, civil service, or similar purposes, like trade, industry, agriculture and like
chambers as provided in Section 88 of the Corporation Code.

Thus, PRA insists that, as an incorporated instrumentality of the National Government, it is

exempt from payment of real property tax except when the beneficial use of the real property is granted to
a taxable person. PRA claims that based on Section 133(o) of the LGC, local governments cannot tax the
national government which delegate to local governments the power to tax.

Issue:

Whether or not Philippine Reclamation Authority (PRA) is an incorporated instrumentality of the

national government and is, therefore, exempt from payment of real property tax under sections 234(a)
and 133(o) of Republic Act 7160?

Held:

Yes it is a Government Instrumentality. However, it is not a GOCC. When the law vests in a
government instrumentality corporate powers, the instrumentality does not necessarily become a
corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it
remains a government instrumentality exercising not only governmental but also corporate powers.

In the case at bench, PRA is not a GOCC ,because it is neither a stock nor a non-stock
corporation. It cannot be considered as a stock corporation because although it has a capital stock
divided into no par value shares as provided in Section 7 of P.D. No. 1084, it is not authorized to
distribute dividends, surplus allotments or profits to stockholders. PRA is a government
instrumentality vested with corporate powers and performing an essential public service pursuant
to Section 2(10) of the Introductory Provisions of the Administrative Code. Being an incorporated
government instrumentality, it is exempt from payment of real property tax. PRA cannot be
considered a non - stock corporation either because it does not have members. A non- stock
corporation must have members.

Many government instrumentalities are vested with corporate powers but they do not become
stock or non-stock corporations, which is a necessary condition before an agency or instrumentality is
deemed a GOCC. The fundamental provision above authorizes Congress to create GOCCs through
special charters on two conditions: 1) the GOCC must be established for the common good; and 2) the
GOCC must meet the test of economic viability. In this case, PRA may have passed the first condition of
common good but failed the second one - economic viability. Undoubtedly, the purpose behind the
creation of PRA was not for economic or commercial activities.

Clearly, respondent has no valid or legal basis in taxing the subject reclaimed lands managed by
PRA. On the other hand, Section 234(a) of the LGC, in relation to its Section 133(o), exempts PRA from
paying realty taxes and protects it from the taxing powers of local government units.
 In this case, there is no proof that PRA granted the beneficial use of the subject reclaimed lands to
a taxable entity. There is no showing on record either that PRA leased the subject reclaimed properties to
a private taxable entity.

WHEREFORE, the petition is GRANTED. The Order of the Regional Trial Court, Branch 195,
Parañaque City, is REVERSED and SET ASIDE.

13.

NATIONAL ELECTRIFICATION ADMINISTRATION vs. DANILO MORALES

GR No. 154200, July 24, 2007

FACTS:

Morales and 105 others, employees of NEA, filed a class suit with the RTC against NEA for
payment of rice allowance, meal allowance, etc. pursuant to RA 6758. RTC favored Morales and ordered
a writ of execution to settle employees’ claims. A notice of garnishment was issued against the funds of
NEA. Willing to comply, NEA however claimed to have no funds to cover the claim and needed to
request for supplemental budget from DBM. Because of this, NEA filed a Motion to Quash, which was
denied by RTC but was granted an extension. Meanwhile, COA advised NEA against making further
payments because the employees may not have been hired in the dates specifically mentioned in RA 6758
that awards them to benefits and that RTC had no jurisdiction to order for the settlement under PD 1445.
Morales appealed to the CA, who also ruled in favor as NEA cannot take shelter in PD 1445, because as a
GOCC, it had the right to be sued.

ISSUE: Whether or not CA committed an error in ordering the writ of execution against funds of NEA?

RULING:

CA did not commit an error in ordering the execution against NEA’s funds.

First, garnishment is proper only when the judgment to be enforced is one for payment of a sum of
money. RTC merely directs petitioners to “settle the claims of respondents”. Therefore, garnishment
cannot be employed to implement such form of judgement.

In, addition, it is undeniable that NEA is a GOCC – a juridical personality separate and distinct
from the government with capacity to sue and be sued. As such GOCC, petitioner NEA cannot evade
execution. However, before execution may proceed against it, a claim for payment of the judgment award
must first be filed with the COA. Under PD 1445, it explicitly mentioned that COA had the primary
jurisdictions to examine, audit and settle all debts and claims of any sort due from or owing the
Government or any of its subdivisions, agencies and instrumentalities, including GOCCs and their
subsidiaries. While GOCCs are like corporations, which have the right to sue or be sued, it is still part of
the “agencies, subdivisions, etc” which is subject to the governance of PD 1445. Therefore, execution of
the settlement of employees’ claims could not have been possible without impleading DBM.

14.
TRADE AND INVESTMENT DEVELOPMENT CORP. OF THE PHILIPPINES vs. MANALANG-
DEMILIGIO

GR No. 176343, September 18, 2012

FACTS:

The Board of Directors of Trade and Investment Development Corporation of the Philippines
(TIDCORP), a wholly owned government corporation, formally charged Maria Rosario Manalang-
Demigillo (Demigillo), then a Senior Vice-President in TIDCORP, with grave misconduct, conduct
prejudicial to the best interest of the service, insubordination, and gross discourtesy in the course of
official duties. TIDCORP alleged that Demigillo engaged in a verbal tussle with Mr. Joel Valdes
(Valdes), President and CEO of TIDCORP. Allegedly, Demigillo also sent a memorandum addressed to
Valdes which contained discourteous and arrogant words.

Pending the investigation, TIDCORP placed Demigillo under preventive suspension for 90 days.

Demigillo assailed her preventive suspension in the Civil Service Commission (CSC). The CSC ruled that
her suspension was not proper because under Section 19(2), Rule II, of the Uniform Rules on
Administrative Cases in the Civil Service (Uniform Rules), a civil service officer like Demigillo might be
preventively suspended by the disciplining authority only if any of the two grounds were present, to wit:
(1) there was a possibility that the civil service employee might unduly influence or intimidate potential
witnesses against him; or (2) there was a possibility that the civil service employee might tamper the
documentary evidence on file in her office. On appeal, the CA affirmed the CSC .

ISSUE: Was Demigillo's 90-day preventive suspension proper?

RULING:

The 90-day preventive suspension order issued against Demigillo was valid. Under Section 51 of the
Revised Administrative Code, the imposition of preventive suspension by the proper disciplining
authority is authorized provided the charge involves dishonesty, oppression, or grave misconduct, or
neglect in the performance of duty, or if there are reasons to believe that the respondent is guilty of
charges which would warrant his removal from the service. Section 51 nowhere states or implies that
before a preventive suspension may issue there must be proof that the subordinate may unduly influence
the witnesses against him or may tamper the documentary evidence on file in her office.

Pursuant to its rule-making authority, the CSC promulgated the Uniform Rules on August 31, 1999. It is
clear from Section 19,supra, that before an order of preventive suspension pending an investigation may
validly issue, only two prerequisites need be shown, namely: (1) that the proper disciplining authority has
served a formal charge to the affected officer or employee; and (2) that the charge involves either
dishonesty, oppression, grave misconduct, neglect in the performance of duty, or if there are reasons to
believe that the respondent is guilty of the charges which would warrant her removal from the
service.Proof showing that the subordinate officer or employee may unduly influence the witnesses
against her or may tamper the documentary evidence on file in her office is not among the prerequisites.

15 .
BOYSCOUT OF THE PHILIPPINES vs. NLRC
GR No. 80767, April 22, 1991

FACTS:
Private respondents Fortunato C. Esquerra, Roberto O. Malaborbor, Estanislao M. Misa, Vicente N.
Evangelista and Marcelino P. Garcia, had all been rank-and-file employees of petitioner Boy Scouts of
the Philippines ("BSP"). At the time of termination of their services, private respondents were stationed at
the BSP Camp in Makiling, Los Baños, Laguna.
The Secretary-General of petitioner BSP issued Special Orders for the five (5) private respondents, to be
transferred from the BSP Camp in Makiling to the BSP Land Grant in Asuncion, Davao del Norte. They
were there assured that their transfer to Davao del Norte would not involve any diminution in salary.
These Orders were opposed by private respondents and they refused to abandon their posts in Laguna.
Private respondents continued to disobey the disputed transfer orders despite warning that their refusal
could result in the termination of their employment.
Petitioner BSP consequently imposed a five-day suspension on the five (5) private respondentsand later
on their services were ordered terminated.
A complaint for illegal transfer, illegal dismissal and ULP was filed against BSP. Private respondents
there sought to enjoin implementation of Special Orders alleging, among other things, that said orders
were prejudicial not only to them but to their families and would seriously affect their economic stability.
Petitioner BSP alleged before the Labor Arbiter that petitioner is a "civic service, non-stock and non-
profit organization, relying mostly on government and public support, existing under and by virtue of
Commonwealth Act No. 111, as amended, by Presidential Decree No. 460.
ISSUE: Whether or not petitioner BSP is in a government-owned or controlled corporation.
RULING:
YES. While the BSP may be seen to be a mixed type of entity, combining aspects of both public and
private entities, we believe that considering the character of its purposes and its functions, the statutory
designation of the BSP as "a public corporation" and the substantial participation of the Government in
the selection of members of the National Executive Board of the BSP, the BSP, as presently constituted
under its charter, is a government-controlled corporation within the meaning of Article IX. (B) (2) (1) of
the Constitution.
The Administrative Code of 1987 designates the BSP as one of the attached agencies of the Department
of Education, Culture and Sports ("DECS"). An "agency of the Government" is defined as referring to
any of the various units of the Government including a department, bureau, office, instrumentality,
government-owned or-controlled corporation, or local government or distinct unit therein.
"Government instrumentality" is in turn defined in the 1987 Administrative Code in the following
manner:
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.
The same Code describes a "chartered institution" in the following terms:
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.
We believe that the BSP is appropriately regarded as "a government instrumentality" under the 1987
Administrative Code.
It thus appears that the BSP may be regarded as both a "government controlled corporation with an
original charter" and as an "instrumentality" of the Government within the meaning of Article IX (B) (2)
(1) of the Constitution. It follows that the employees of petitioner BSP are embraced within the Civil
Service and are accordingly governed by the Civil Service Law and Regulations.
The Labor Arbiter and public respondent NLRC had no jurisdiction over the complaint filed by private
respondents; neither labor agency had before it any matter which could validly have been passed upon by
it in the exercise of original or appellate jurisdiction.

16.
FAR EAST BANK AND TRUST COMPANY vs. CA
GR No. 129130, December 9, 2005
FACTS:

Petitioner is a domestic banking corporation duly organized and existing under and by virtue of Philippine
laws. In the early part of 1992, the Cavite Development Bank [CDB], also a domestic banking
corporation, was merged with Petitioner with the latter as its surviving entity [under] the merger.
Petitioner being the surviving entity it acquired all the assets of CDB.

During the period from 1990 to 1991, CDB sold some acquired assets in the course of which it allegedly
withheld the creditable tax from the sales proceeds which amounted to P755,715.00.

In said years, CDB filed income tax returns which reflected that CDB incurred negative taxable income or
losses for both years. Since there was no tax against which to credit or offset the taxes withheld by CDB,
the result was that CDB, according to petitioner, had excess creditable withholding tax.

Thus, petitioner, being the surviving entity of the merger, filed this Petition for Review after its
administrative claim for refund was not acted upon.

ISSUE: Whether petitioner adduced sufficient evidence to prove its entitlement to a refund?

RULING:

Petitioner has not sufficiently presented a case for the application of an exception from the rule.

It is incumbent upon the payee to reflect in his or its own return the income upon which any
creditable tax is required to be withheld at the source. Only when there is an excess of the amount of tax
so withheld over the tax due on the payee's return can a refund become possible.
A taxpayer must thus do two things to be able to successfully make a claim for the tax refund: (a) declare
the income payments it received as part of its gross income and (b) establish the fact of withholding. [18]
On this score, the relevant revenue regulation provides as follows:

Section 10. Claims for tax credit or refund. -- Claims for tax credit or refund of income tax deducted and
withheld on income payments shall be given due course only when it is shown on the return that the
income payment received was declared as part of the gross income and the fact of withholding is
established by a copy of the statement duly issued by the payor to the payee (BIR Form No. 1743.1)
showing the amount paid and the amount of tax withheld therefrom.

We must emphasize that tax refunds, like tax exemptions, are construed strictly against the taxpayer and
liberally in favor of the taxing authority. [30] In the event, petitioner has not met its burden of proof in
establishing the factual basis for its claim for refund and we find no reason to disturb the ruling of the
lower courts.

17.
SEA-LAND SERVICE, INC., vs.
COURT OF APPEALS, A.P. MOLLER/MAERSK LINE and MAERSK-TABACALERA
SHIPPING AGENCY (FILIPINAS), INC.
[G.R. No. 126212. March 2, 2000]

FACTS:

Petitioner Sea-Land Services, Inc. and private respondent A.P. Moller/Maersk Line (hereinafter referred
to as "AMML"), both carriers of cargo in containerships as well as common carriers, entered into a
contract entitled, "Cooperation in the Pacific" (hereinafter referred to as the "Agreement"), a vessel
sharing agreement whereby they mutually agreed to purchase, share and exchange needed space for cargo
in their respective containerships. Under the Agreement, they could be, depending on the occasion, either
a principal carrier (with a negotiable bill of lading or other contract of carriage with respect to cargo) or a
containership operator (owner, operator or charterer of containership on which the cargo is carried).

During the lifetime of the said Agreement, Florex International, Inc. (hereinafter referred to as "Florex")
delivered to private respondent AMML cargo of various foodstuffs, with Oakland, California as port of
discharge and San Francisco as place of delivery. Pursuant to the Agreement, respondent AMML loaded
the subject cargo on MS Sealand Pacer, a vessel owned by petitioner. Under this arrangement, therefore,
respondent AMML was the principal carrier while petitioner was the containership operator. The
consignee refused to pay for the cargo, alleging that delivery thereof was delayed.

Thus, Florex filed a complaint against respondent Maersk-Tabacalera Shipping Agency (Filipinas), Inc.
for reimbursement of the value of the cargo and other charges. Respondent AMML filed its Answer
alleging that even on the assumption that Florex was entitled to reimbursement; it was petitioner who
should be liable. Accordingly, respondent AMML filed a Third Party Complaint against petitioner
averring that whatever damages sustained by Florex were caused by petitioner, which actually received
and transported Florexs cargo on its vessels and unloaded them.

Petitioner filed a Motion to Dismiss the Third Party Complaint on the ground of failure to state a cause of
action and lack of jurisdiction. Petitioner also prayed either for dismissal or suspension of the Third Party
Complaint on the ground that there exists an arbitration agreement between it and respondent AMML.
The lower court issued an Order denying petitioners Motion to Dismiss. Petitioners Motion for
Reconsideration was likewise denied so they subsequently filed a petition for certiorari with the Court of
Appeals. Meanwhile, petitioner also filed its Answer to the Third Party Complaint in the trial court.
Respondent CA rendered the assailed Decision dismissing the petition for certiorari. With the denial of its
Motion for Reconsideration, petitioner filed the instant petition for review.

ISSUE:

Whether CA erred in holding that the terms of the contract do not require arbitration as a condition
precedent to judicial action where such an agreement to arbitrate exists

RULING:

YES, For respondent Court of Appeals to say that the terms of the contract do not require arbitration as a
condition precedent to judicial action is erroneous. It is clear that arbitration is the mode provided by
which respondent AMML as Principal Carrier can seek damages and/orindemnity from petitioner, as
Containership Operator. Stated differently, respondent AMML is barred from taking judicial action
against petitioner by the clear terms of their Agreement.

This Court has previously held that arbitration is one of the alternative methods of dispute resolution that
is now rightfully vaunted as “the wave of the future” in international relations, and is recognized
worldwide. To brush aside a contractual agreement calling for arbitration in case of disagreement between
the parties would therefore be a step backward.

All told, when the text of a contract is explicit and leaves no doubt as to its intention, the court may not
read into it any other intention that would contradict its plain import. Arbitration being the mode of
settlement between the parties expressly provided for by their Agreement, the Third Party Complaint
should have been dismissed.

18.
LUZ R. YAMANE, in her capacity as the CITY TREASURER OF MAKATI, petitioner vs. BA
LEPANTO CONDOMINIUM CORPORATION, respondent.
[G.R. No. 154993 October 25, 2005]
FACTS:

Respondent BA-Lepanto Condominium Corporation (the “Corporation”) is a condominium corporation

constituted in accordance with the Condominium Act, which owns and holds title to the common and
limited common areas of the BA-Lepanto Condominium (the “Condominium”), situated in Makati City.
Its membership comprises the various unit owners. The Corporation is authorized, under Article V of its
Amended By-Laws, to collect regular assessments from its members for operating expenses, capital
expenditures on the common areas, and other special assessments as provided for in the Master Deed with
Declaration of Restrictions of the Condominium.

The Corporation received a Notice of Assessment signed by the City Treasurer. The Notice of
Assessment stated that the Corporation is “liable to pay the correct city business taxes.” The Notice of
Assessment was silent as to the statutory basis of the business taxes assessed. The Corporation responded
with a written tax protest addressed to the City Treasurer.

According to respondent, under both the Makati Code and the Local Government Code, “business” is
defined as “trade or commercial activity regularly engaged in as a means of livelihood or with a view to
profit.” It was submitted that the Corporation, as a condominium corporation, was organized not for
profit, but to hold title over the common areas of the Condominium, to manage the Condominium for the
unit owners, and to hold title to the parcels of land on which the Condominium was located. Neither was
the Corporation authorized, under its articles of incorporation or by-laws to engage in profit-making
activities. The assessments it did collect from the unit owners were for capital expenditures and operating
expenses.

The protest was rejected by the City Treasurer and insisted that the collection of dues from the unit
owners was effected primarily sustain and maintain the condominium which the unit owners may in the
future sell at a good price. In short, the petitioner avers that it is engaged in business for profit making.

Because of the denial of the protest, respondent filed an Appeal with the RTC of Makati. However, the
latter dismissed the case. As a recourse, respondent filed a Petition for Review under Rule 42 of the Rules
of Civil Procedure with the CA. It was dismissed outright because only decisions of the RTC brought on
appeal from a first level court could be elevated for review under Rule 42. However, it was reinstated by
the CA because of Sec. 195 of the LGC stating that the remedy of the taxpayer on the denial of the protest
filed with the local treasurer is to appeal the denial with the court of competent jurisdiction. Afterwards,
the CA reversed the ruling of the RTC.

ISSUE:

Whether or not the City of Makati may collect business taxes on condominium corporations.

RULING:

No. The power of local government units to impose taxes within its territorial jurisdiction derives from
the Constitution itself, which recognizes the power of these units “to create its own sources of revenue
and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy.” These guidelines and limitations as provided
by Congress are in main contained in the Local Government Code of 1991, which provides for
comprehensive instances when and how local government units may impose taxes.

Section 143 of the Code specifically enumerates several types of business on which municipalities and
cities may impose taxes. However, Condominium corporations are generally exempt from local business
taxation under the Local Government Code, irrespective of any local ordinance that seeks to declare
otherwise. Moreover, nowhere in the Makati Revenue Code that would serve as the legal authority for the
collection of business taxes from condominiums in Makati. We can elicit from the Condominium Act that
a condominium corporation is precluded by statute from engaging in corporate activities other than the
holding of the common areas, the administration of the condominium project, and other acts necessary,
incidental or convenient to the accomplishment of such purposes. Neither the maintenance of livelihood,
nor the procurement of profit, fall within the scope of permissible corporate purposes of a condominium
corporation under the Condominium Act. None of these stated corporate purposes are geared towards
maintaining a livelihood or the obtention of profit. Even though the Corporation is empowered to levy
assessments or dues from the unit owners, these amounts collected are not intended for the incurrence of
profit by the Corporation or its members, but to shoulder the multitude of necessary expenses that arise
from the maintenance of the Condominium Project.

Case no. 19
De La Llana v. Alba
March 12, 1982 |G.R. No. L-57883

FACTS:
Batasang Pambansa Blg. 129 entitled, “An act reorganizing the Judiciary, Appropriating Funds Therefor
and for Other Purposes” was passed, the assailed legislation mandates that Justices and judges of inferior
courts from the Court of Appeals to municipal circuit courts, except the occupants of the Sandiganbayan
and the Court of Tax Appeals, unless appointed to the inferior courts established by such Act, would be
considered separated from the judiciary. The honorable petitioner sought to prohibit the respondents from
implementing BP 129, alleging that the security of tenure provision of the Constitution has been ignored
and disregarded. Furthermore, they assert that the reorganization was done in lack of good faith and is
unconstitutional. However, the Solicitor General denies his claim and maintains that the allegation of lack
of good faith is unwarranted and devoid of any support in law, and that BP 129 was a legitimate exercise
of the power vested in the Batasang Pambansa to reorganize the judiciary.
Issue
Whether or not the assailed legislation is unconstitutional for lack of good faith?
Ruling:
No. The Court held that there was good faith in reorganizing the judiciary. The imputation of arbitrariness
to the legislative body in the enactment of Batas Pambansa Blg. 129 to demonstrate lack of good faith
does manifest violence to the facts. Petitioners should have exercised greater care in informing
themselves as to its antecedents. They had laid themselves open to the accusation of reckless disregard for
the truth, On August 7, 1980, a Presidential Committee on Judicial Reorganization was organized. This
Executive Order was later amended by Executive Order No. 619-A., dated September 5 of that year. It
clearly specified the task assigned to it: "1. The Committee shall formulate plans on the reorganization of
the Judiciary which shall be submitted within seventy (70) days from August 7, 1980 to provide the
President sufficient options for the reorganization of the entire Judiciary which shall embrace all lower
courts, including the Court of Appeals, the Courts of First Instance, the City and Municipal Courts, and
all Special Courts, but excluding the Sandigan Bayan." On October 17, 1980, a Report was submitted by
such Committee on Judicial Reorganization. Citing the separate opinion of Justice Laurel in the case of
Zandueta v. De La Costa, the Court similarly maintains that the passage of BP 129 was in good faith
seeing as its purpose was for the fulfillment of what was considered a great public need by the legislative
department, not intended to adversely affect the tenure of judges or any particular judge. While it is
possible that the legislature could deliberately abuse the power to reorganize the judiciary, thus lacking
good faith, the Court is unconvinced that such was the case in this situation. Thus, where the Court holds
that the reorganization of the judiciary by virtue of BP 129 was done in good faith, the “separation” of the
petitioner due to the abolition of his office is valid and constitutional.

20.
Bagaoisan vs National Tobacco Administration
[G.R. No. 152845 August 5, 2003]

FACTS:

The petitioner was terminated from their position in the National Tobacco Administration as a
result of the executive order issued by then president Estrada which mandates for the stream lining of the
national tobacco administration, a government agency under the department of agriculture.

The petitioners filed a letter of appeal to the civil service commission to recall the Organization
Structure And Staffing Pattern (OSSP).Petitioner all file a petition for certiorari with prohibition an
mandamus with prayer for preliminary mandatory injunction and a temporary restraining order with the
regional trial court of Batak to prevent the respondent from enforcing the notice of termination and from
ousting the petitioners in their respective offices.

The regional trial court issued an order ordering the National Tobacco Administration to appoint
the petitioner to the OSSP to position similar to the one that they hold before. The National Tobacco
Administration appealed to the court of appeals who reversed the decision of the RTC.

Petitioner appealed to the Supreme Court.

ISSUE:

Whether or not, the reorganization of the national tobacco administration is valid true issuance of
executive order by the president.

HELD:

According to the supreme court, the president has the power to reorganized an office to achieve
simplicity, economy and efficiency as provided under executive order 292 sec. 31 and section 48 of RA
7645 which provides that activities of executive agencies may be scaled down if it is no longer essential
for the delivery of public service.

The general rule has always been that the power to abolish a public office is lodged with the
legislature. This proceeds from the legal precept that the power to create includes the power to destroy. A
public office is either created by the Constitution, by statute, or by authority of law. Thus, except where
the office was created by the Constitution itself, it may be abolished by the same legislature that brought
it into existence. The exception, however, is that as far as bureaus, agencies or offices in the executive
department are concerned, the President’s power of control may justify him to inactivate the functions of
a particular office, or certain laws may grant him the broad authority to carry out reorganization
measures.

It having been duly established that the President has the authority to carry out reorganization in
any branch or agency of the executive department, what is then left for us to resolve is whether or not the
reorganization is valid. In this jurisdiction, reorganizations have been regarded as valid provided they are
pursued in good faith. Reorganization is carried out in ‘good faith’ if it is for the purpose of economy or
to make bureaucracy more efficient. Pertinently, Republic Act No. 6656 provides for the circumstances
which may be considered as evidence of bad faith in the removal of civil service employees made as a
result of reorganization, to wit: (a) where there is a significant increase in the number of positions in the
new staffing pattern of the department or agency concerned; (b) where an office is abolished and another
performing substantially the same functions is created; (c) where incumbents are replaced by those less
qualified in terms of status of appointment, performance and merit; (d) where there is a classification of
offices in the department or agency concerned and the reclassified offices perform substantially the same
functions as the original offices; and (e) where the removal violates the order of separation.

WHEREFORE, the Motion to Admit Petition for En Banc resolution and the Petition for an En
Banc Resolution are DENIED for lack of merit. Let entry of judgment be made in due course. No costs.

21.
DENR vs. DENR Region 12 Employees
[ G.R. No. 149724. August 19, 2003 ]

FACTS:

On November 15, 1999, Regional Executive Director of the Department of Environment and Natural
Resources for Region XII, issued a Memorandum directing the immediate transfer of the DENR XII
Regional Offices from Cotabato City to Koronadal, South Cotabato. The Memorandum was issued
pursuant to DENR Administrative Order No. 99-14.

Respondents, employees of the DENR Region XII filed with the Regional Trial Court of Cotabato, a
petition for nullity of orders with prayer for preliminary injunction. On January 14, 2000 , the trial court
rendered judgment, ordering the respondents herein(DENR) to cease and desist from enforcing their
Memorandum Order dated November 15, 1999 relative to the transfer of the DENR Regional Offices
from Region 12 to Region 11 at Koronadal, South Cotabato for being bereft of legal basis and issued with
grave abuse of discretion amounting to lack or excess of jurisdiction on their part, and they are further
ordered to return back the seat of the DENR Regional Offices 12 to Cotabato City.

The petitioner filed a Motion for Reconsideration with Motion to Dismiss, raising the following grounds:
(a) The power to transfer the Regional Office of the Department of Environment and Natural Resources
(DENR) is executive in nature. (b) The decision to transfer the Regional Office is based on Executive
Order No. 429, which reorganized Region XII. (c) The validity of EO 429 has been affirmed by the
Honorable Supreme Court in the Case of Chiongbian vs. Orbos (1995) 245 SCRA 255. (d) Since the
power to reorganize the Administrative Regions is Executive in Nature citing Chiongbian, the Honorable
Court has no jurisdiction to entertain this petition.

Petitioner’s motion for reconsideration was denied in an Order dated April 10, 2000. A petition for
certiorari under Rule 65 was filed before the Court of Appeals, docketed as CA-G.R. SP No. 58896. The
petition was dismissed outright for: (1) failure to submit a written explanation why personal service was
not done on the adverse party; (2) failure to attach affidavit of service; (3) failure to indicate the material
dates when copies of the orders of the lower court were received; (4) failure to attach certified true copy
of the order denying petitioner’s motion for reconsideration; (5) for improper verification, the same being
based on petitioner’s “knowledge and belief,” and (6) wrong remedy of certiorari under Rule 65 to
substitute a lost appeal.

This is a petition for review assailing the Resolutions dated May 31, 20001 of the Court of Appeals which
dismissed the petition for certiorari in CA-G.R. SP No. 58896, and its Resolution dated August 20,
2001,2 which denied the motion for reconsideration.

In essence, petitioner argues that the trial court erred in enjoining it from causing the transfer of the
DENR XII Regional Offices, considering that it was done pursuant to DENR Administrative Order 99-14
and that rules of procedure can not be used to defeat the ends of substantial justice.

ISSUE:

(1) Whether DAO-99-14 and the Memorandum implementing the same were valid; and (2) Whether the
DENR Secretary has the authority to reorganize the DENR. (c) Whether or not rules of procedure are to
be applied in a very rigid and technical manner and may form as basis for denial of a petition.

RULING:

The qualified political agency doctrine, all executive and administrative organizations are adjuncts of the
Executive Department, and the acts of the Secretaries of such departments, performed and promulgated in
the regular course of business, are, unless disapproved or reprobated by the Chief Executive, are
presumptively the acts of the Chief Executive. It is corollary to the control power of the President as
provided for under Art. VII Sec. 17 of the 1987 Constitution: "The President shall have control of all the
executive departments, bureaus, and offices. He shall ensure that the laws be faithfully executed."

In the case at bar, the DENR Secretary can validly reorganize the DENR by ordering the transfer of the
DENR XII Regional Offices from Cotabato City to Koronadal, South Cotabato. The exercise of this
authority by the DENR Secretary, as an alter ego, is presumed to be the acts of the President for the latter
had not expressly repudiated the same. Thus, the DAO-99-14 and the memorandum implementing the
same were also valid.

This Court is fully aware that procedural rules are not to be simply disregarded for these prescribed
procedures ensure an orderly and speedy administration of justice. However, it is equally true that
litigation is not merely a game of technicalities. Time and again, courts have been guided by the principle
that the rules of procedure are not to be applied in a very rigid and technical manner, as rules of procedure
are used only to help secure and not to override substantial justice. Thus, if the application of the Rules
would tend to frustrate rather than promote justice, it is always within the power of this Court to suspend
the rules, or except a particular case from its operation.

22.
ANTONIO M. CARPIO VS EXECUTIVE SECRETARY
 GR NO. 96409, FEBRUARY 14, 1992

FACTS:
The Congress passed Republic Act No. 6975 entitled "AN ACT ESTABLISHING THE
PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED DEPARTMENT OF THE INTERIOR
AND LOCAL GOVERNMENT, AND FOR OTHER PURPOSES". Following the said Act's approval by
President Corazon C. Aquino on December 13, 1990, it was published on December 17, 1990.
However, petitioner as citizen, taxpayer and member of the Philippine Bar sworn to defend the
Constitution, filed the petition now at bar on December 20, 1990, seeking this Court's declaration of
unconstitutionality of RA 6975 because it allegedly contravened Art. XVI, sec. 6 of the 1986
Constitution: “The State shall establish and maintain one police force, which shall be national in scope
and civilian in character, to be administered and controlled by a national police commission. The
authority of local executives over the police units in their jurisdiction shall be provided by law.”
Petitioner herein respectfully advances the view that RA 6975 emasculated the National Police
Commission by limiting its power "to administrative control" over the Philippine National Police (PNP),
thus, "control" remained with the Department Secretary under whom both the National Police
Commission and the PNP were placed.

ISSUE:
W/N the President abdicated its control power over the PNP and NPC by virtue of RA 6975?

RULING:
The Supreme Court held that the President has control of all executive departments, bureaus, and
offices. This presidential power of control over the executive branch of government extends over all
executive officers from Cabinet Secretary to the lowliest clerk.
As a corollary rule to the control powers of the President is the “Doctrine of Qualified Political
Agency.” As the President cannot be expected to exercise his control powers all at the same time and in
person, he will have to delegate some of them to his Cabinet members.
Under this doctrine, which recognizes the establishment of a single executive, “all executive and
administrative organizations are adjuncts of the Executive Department, the heads of the various executive
departments are assistants and agents of the Chief Executive, and, except in cases where the Chief
Executive is required by the Constitution or law to act in person or the exigencies of the situation demand
that he act personally, the multifarious executive and administrative functions of the Chief Executive are
performed by and through the executive departments, and the acts of the Secretaries of such departments,
performed and promulgated in the regular course of business, unless disapproved or reprobated by the
Chief Executive, are presumptively the acts of the Chief Executive.
Thus, “the President’s power of control is directly exercised by him over the members of the
Cabinet who, in turn, and by his authority, control the bureaus and other offices under their respective
jurisdictions in the executive department.”
The placing of NAPOLCOM and PNP under the reorganized DILG is merely an administrative
realignment that would bolster a system of coordination and cooperation among the citizenry, local
executives and the integrated law enforcement agencies and public safety agencies.

23.
BANDA VS ERMITA
GR NO. 166620, APRIL 10, 2010

FACTS:
The present controversy arose from a Petition for Certiorari and prohibition challenging the
constitutionality of Executive Order No. 378 dated October 25, 2004, issued by President Gloria
Macapagal Arroyo (President Arroyo). Petitioners characterize their action as a class suit filed on their
own behalf and on behalf of all their co-employees at the National Printing Office (NPO).
The NPO was formed on July 25, 1987, during the term of former President Corazon C. Aquino
(President Aquino), by virtue of Executive Order No. 285 1 which provided, among others, the creation of
the NPO from the merger of the Government Printing Office and the relevant printing units of the
Philippine Information Agency (PIA)
On October 25, 2004, President Arroyo issued the herein assailed Executive Order No. 378, amending
Section 6 of Executive Order No. 285 by, inter alia, removing the exclusive jurisdiction of the NPO over
the printing services requirements of government agencies and instrumentalities.

ISSUE:
W/N it is beyond the executive powers of President Arroyo to amend or repeal Executive Order
No. 285 issued by former President Aquino when the latter still exercised legislative powers?

RULING:
As to the merits of the case, it is a well-settled principle in jurisprudence that the President has the
power to reorganize the offices and agencies in the executive department in line with the President’s
constitutionally granted power of control over executive offices and by virtue of previous delegation of
the legislative power to reorganize executive offices under existing statutes.
Concomitant to such power to abolish, merge or consolidate offices in the Office of the President
Proper and to transfer functions/offices not only among the offices in the Office of President Proper but
also the rest of the Office of the President and the Executive Branch, the President implicitly has the
power to effect less radical or less substantive changes to the functional and internal structure of the
Office of the President, including the modification of functions of such executive agencies as the
exigencies of the service may require.
It is undisputed that the NPO, as an agency that is part of the Office of the Press Secretary (which
in various times has been an agency directly attached to the Office of the Press Secretary or as an agency
under the Philippine Information Agency), is part of the Office of the President.
In the case at bar, there was neither an abolition of the NPO nor a removal of any of its functions
to be transferred to another agency. Under the assailed Executive Order No. 378, the NPO remains the
main printing arm of the government for all kinds of government forms and publications but in the
interest of greater economy and encouraging efficiency and profitability, it must now compete with the
private sector for certain government printing jobs, with the exception of election paraphernalia which
remains the exclusive responsibility of the NPO, together with the Bangko Sentral ng Pilipinas, as the
Commission on Elections may determine. At most, there was a mere alteration of the main function of the
NPO by limiting the exclusivity of its printing responsibility to election forms.
In sum, the Court finds that the petition failed to show any constitutional infirmity or grave abuse
of discretion amounting to lack or excess of jurisdiction in President Arroyo’s issuance of Executive
Order No. 378.
WHEREFORE, the petition is hereby DISMISSED and the prayer for a Temporary Restraining Order
and/or a Writ of Preliminary Injunction is hereby DENIED.
No costs. SO ORDERED.

24.
PICHAY VS OFFICE OF THE DEPUTY SEC. FOR LEGAL AFFAIRS INVESTIGATION AND
ADJUDICATION DIVISION
GR NO. 196425, JULY 24, 2012

FACTS:
On April 16, 2001, then President Gloria Macapagal-Arroyo issued Executive Order No. 12 (E.O.
12) creating the Presidential Anti-Graft Commission (PAGC) and vesting it with the power to investigate
or hear administrative cases or complaints for possible graft and corruption, among others, against
presidential appointees and to submit its report and recommendations to the President.
However, On November 15, 2010, President Benigno Simeon Aquino III issued Executive Order
No. 13 (E.O. 13), abolishing the PAGC and transferring its functions to the Office of the Deputy
Executive Secretary for Legal Affairs (ODESLA), more particularly to its newly-established Investigative
and Adjudicatory Division (IAD). 
On April 6, 2011, respondent Finance Secretary Cesar V. Purisima filed before the IAD-
ODESLA a complaint affidavit for grave misconduct against petitioner Prospero A. Pichay, Jr., Chairman
of the Board of Trustees of the Local Water Utilities Administration (LWUA), as well as the incumbent
members of the LWUA Board of Trustees, namely, Renato Velasco, Susana Dumlao Vargas, Bonifacio
Mario M. Pena, Sr. and Daniel Landingin, which arose from the purchase by the LWUA of Four Hundred
Forty-Five Thousand Three Hundred Seventy Seven (445,377) shares of stock of Express Savings Bank,
Inc.
On April 14, 2011, petitioner received an order signed by Executive Secretary Paquito N. Ochoa,
Jr. requiring him and his co-respondents to submit their respective written explanations under oath. In
compliance therewith, petitioner filed a Motion to Dismiss Ex Abundante Ad Cautelam manifesting that a
case involving the same transaction and charge of grave misconduct entitled, "Rustico B. Tutol, et al. v.
Prospero Pichay, et al.", and docketed as OMB-C-A-10-0426-I, is already pending before the Office of
the Ombudsman.

ISSUE:
W/N E.O 13 is unconstitutional for abrogating unto an administrative office a quasi-judicial
function through the E.O and not through the legislative enactment by Congress?

RULING:
No. The President has Continuing Authority to Reorganize the Executive Department under E.O.
292.
In the case of Buklod ng Kawaning EIIB v. Zamora the Court affirmed that the President's
authority to carry out a reorganization in any branch or agency of the executive department is an express
grant by the legislature by virtue of E.O. 292, thus:
“But of course, the list of legal basis authorizing the President to reorganize any department or agency in
the executive branch does not have to end here. We must not lose sight of the very source of the power –
that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292
(otherwise known as the Administrative Code of 1987), "the President, subject to the policy of the
Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing
authority to reorganize the administrative structure of the Office of the President." For this purpose, he
may transfer the functions of other Departments or Agencies to the Office of the President.
The law grants the President this power in recognition of the recurring need of every President to
reorganize his office "to achieve simplicity, economy and efficiency." The Office of the President is the
nerve center of the Executive Branch. To remain effective and efficient, the Office of the President must
be capable of being shaped and reshaped by the President in the manner he deems fit to carry out his
directives and policies. After all, the Office of the President is the command post of the President.
Clearly, the abolition of the PAGC and the transfer of its functions to a division specially created
within the ODESLA is properly within the prerogative of the President under his continuing "delegated
legislative authority to reorganize" his own office pursuant to E.O. 292.

25.
LACSON-MANGALLANES, CO. INC., VS PANO
21 SCRA 895

FACTS:
In 1932, Jose Magallanes was a permittee and actual occupant of a 1,103-hectare pasture land
situated in Tamlangon, Municipality of Bansalan, Province of Davao.
On January 9, 1953, Magallanes ceded his rights and interests to a portion (392, 7569 hectares) of
the above public land to plaintiff.
On April 13, 1954, the portion Magallanes ceded to plaintiff was officially released from the
forest zone as pasture land and declared agricultural land.
On January 26, 1955, Jose Paño and nineteen other claimants 2 applied for the purchase of ninety
hectares of the released area.
On March 29, 1955, Plaintiff Corporation in turn filed its own sales application covering the
entire released area. This was protested by Jose Paño and his nineteen companions upon the averment that
they are actual occupants of the part thereof covered by their own sales application.
The Director of Lands, following an investigation of the conflict, rendered a decision on July 31,
1956 giving due course to the application of plaintiff corporation, and dismissing the claim of Jose Paño
and his companions. A move to reconsider failed. On July 5, 1957, the Secretary of Agriculture and
Natural Resources — on appeal by Jose Paño for himself and his companions — held that the appeal was
without merit and dismissed the same. The case was elevated to the President of the Philippines.
 On June 25, 1958, Executive Secretary Juan Pano, ”by authority of the President" decided the
controversy, modified the decision of the Director of Lands as affirmed by the Secretary of Agriculture
and Natural Resources.
Plaintiff submits that the decision of the Executive Secretary herein is an undue delegation of
power. The Constitution, petitioner asserts, does not contain any provision whereby the presidential
power of control may be delegated to the Executive Secretary. It is argued that it is the constitutional duty
of the President to act personally upon the matter.

ISSUE:
W/N the Executive Secretary, acting by authority of the President, reverse a decision of the
Director of Lands that had been affirmed by the Executive Secretary of Agriculture and Natural
Resources?

RULING:
It is correct to say that constitutional powers there are which the President must exercise in
person. Not as correct, however, is it so say that the Chief Executive may not delegate to his Executive
Secretary acts which the Constitution does not command that he perform in person. Reason is not wanting
for this view. The President is not expected to perform in person all the multifarious executive and
administrative functions. The Office of the Executive Secretary is an auxiliary unit which assists the
President. The rule which has thus gained recognition is that "under our constitutional setup the Executive
Secretary who acts for and in behalf and by authority of the President has an undisputed jurisdiction to
affirm, modify, or even reverse any order" that the Secretary of Agriculture and Natural Resources,
including the Director of Lands, may issue.
But plaintiff underscores the fact that the Executive Secretary is equal in rank to the other
department heads, no higher than anyone of them. From this, plaintiff carves the argument that one
department head, on the pretext that he is an alter ego of the President, cannot intrude into the zone of
action allocated to another department secretary. This argument betrays lack of appreciation of the fact
that where, as in this case, the Executive Secretary acts "By authority of the President," his decision is
that of the President's. Such decision is to be given full faith and credit by our courts. The assumed
authority of the Executive Secretary is to be accepted. For, only the President may rightfully say that the
Executive Secretary is not authorized to do so. Therefore, unless the action taken is "disapproved or
reprobated by the Chief Executive, "that remains the act of the Chief Executive, and cannot be
successfully assailed. No such disapproval or reprobation is even intimated in the record of this case.
For the reasons given, the judgment under review is hereby affirmed.
Costs against plaintiff. So ordered.

26. Medalla vs. Sayo 103 587

Facts:

Petitioner, Dr. Eustaquio M. Medalla, Jr., is the Chief of Clinics of the Caloocan City General Hospital,
Caloocan City. Private respondent,, Dr. Honorato G. Mackay was the Resident Physician thereat.

When the position of Assistant, hospital Administrator of the Caloocan City General Hospital became
vacant upon the resignation of the incumbent, former Caloocan City Mayor Alejandro A. Fider
designated and subsequently appointed, as Assistant Hospital Administrator private respondent Dr.
Mackay, a Resident Physician in said hospital. Petitioner, Dr. Medalla, Jr., protested Dr. Mackay's
designation and subsequent appointment alleging among others that, as Chief of Clinics, he (Medalla)
was next-in-rank. The then Acting City Mayor Virgilio P. Robles, who succeeded former Mayor,
sustained Mackay's appointment. Medalla elevated his case to the Civil Service Commission on appeal.
the Civil Service Merit Systems Board sustaining Medalla's appeal and revoking Mackay's appointment
as Assistant Hospital Administrator.

Upon automatic review by the office of the president, the president executive assistant rendered a
decision revoking the appointment of Dr. Mackay and ordered the position to be awarded to Dr. Medalla.
Totally disregarding the Decision of the Office of the President, the same Acting City Mayor appointed
Mackay, this time as Hospital Administrator.

Issue:

Whether or not the appointment of Dr. Mackay is valid.

Held:

No. While the qualifications of both petitioner Medalla and private respondent Mackay are at par, yet, it
is clear that the position of Chief of Clinics is the next lower position to hospital Administrator under the
organizational line-up of the hospital. Consequently, at the time of Mackays appointment as Assistant
Hospital Administrator and subsequently hospital Administrator, Medalla outranked Mackay who was
only a Resident Physician and, therefore, as the next-in rank, Medalla is entitled to appointment as
Hospital Administrator.

27. Montes vs. Civil Service Board of Appeals 101 Phil 490

Facts:

Petitioner-appellant was a watchman of the Floating Equipment Section, Ports and Harbors Division,
Bureau of Public Works. In Administrative Case No. R-8182 instituted against him for negligence in the
performance of duty (Dredge No. 6 under him had sunk because of water in the bilge, which he did not
pump out while under his care), the Commissioner of Civil Service exonerated him, on the basis of
findings made by a committee. But the Civil Service Board of Appeals modified the decision, finding
petitioner guilty of contributory negligence in not pumping the water from the bilge, and ordered that he
be considered resigned effective his last day of duty with pay, without prejudice to reinstatement at the
discretion of the appointing officer.

Petitioner filed an action in the Court of First Instance of Manila to review the decision, but the said court
dismissed the action on a motion to dismiss, on the ground that petitioner had not exhausted all his
administrative remedies before he instituted the action.

Issue:

Whether or not there is a need of exhaustion of adminiatrative remedies before seeking relief from the
courts?

Held:

Yes. The doctrine of exhaustion, of administrative remedies requires where an administrative remedy is
provided by statute, as in this case, relief must be sought by exhausting this remedy before the courts will
act. (42 Am. Jur. 580-581.) The doctrine is a device based on considerations of comity and convenience.
If a remedy is still available within the administrative machinery, this should be resorted to before resort
can be made to the courts, not only to give the administrative agency opportunity to decide the matter by
itself correctly, but also to prevent unnecessary and premature resort to the courts.

Section 2 of Commonwealth Act No. 598 is a clear expression of the policy or principle of exhaustion of
administrative remedies. If the President, under whom the Civil Service directly falls in our
administrative system as head of the executive department, may be able to grant the remedy that
petitioner pursues, reasons of comity and orderly procedure demand that resort be made to him before
recourse can be had to the courts.

28. Lianga Bay Logging vs Enage 152 SCRA 80

Facts:

The parties herein are both forest concessionaries whose licensed areas are adjacent to each other. They
have a common boundary-the Agusan-Surigao Provincial boundary-whereby the eastern boundary of
respondent Ago's concession is petitioner Lianga's western boundary. Because of reports of encroachment
by both parties on each other's concession areas, the Director of Forestry ordered a survey to establish on
the ground the common boundary of their respective concession areas. Forester Cipriano Melchor
undertook the survey and fixed the common boundary to which respondent Ago protested. The Director
of Forestry ruled that "the claim of the Ago Timber Corporation runs counter to the intentions of this
Office is granting the Timber License Agreement to the Lianga Bay Logging Co. In an appeal interposed
by respondent Ago in the Department of Agriculture and Natural Resources, it set asside the decision of
Director of Forestry and ruled in favor of Ago. Petitioner elevated the case to the Office of the President,
which affirmed the decision Secretary of Agriculture and Natural Resources. On motion for
reconsideration, the Office of the President issued another decision, reversing Acting Secretary of
Agriculture and Natural Resources and affirming in toto and reinstating the decision of the Director of
Forestry. A civil action was filed by Ago in determining the boundary line. Hence, this petition.

Issue:

Whether or not the Director of Forestry as an administrative agency has jurisdiction over the case.

Held:

Yes. Respondent Judge erred in taking cognizance of the complaint filed by respondent Ago, asking for
the determination anew of the correct boundary line of its licensed timber area, for the same issue had
already been determined by the Director of Forestry, the Secretary of Agriculture and Natural Resources
and the Office of the President, administrative officials under whose jurisdictions the matter properly
belongs. Section 1816 of the Revised Administrative Code vests in the Bureau of Forestry, the
jurisdiction and authority over the demarcation, protection, management, reproduction, reforestation,
occupancy, and use of all public forests and forest reserves and over the granting of licenses for game and
fish, and for the taking of forest products, including stone and earth therefrom. The Secretary of
Agriculture and Natural Resources, as department head, may repeal or modify the decision of the Director
of Forestry when advisable in the public interests, whose decision is in turn appealable to the Office of the
President.