MACEDA v.

ERB

FACTS:

Because of the outbreak of the conflict on the Persian Gulf, private respondents oil companies
filed with the ERB their applications on oil price increases. The ERB granted provisional
increase (P1.42 per liter)

Petitioner Maceda filed a petition for Prohibition seeking to nullify this provisional increase he
claims that the increase in prices has to undergo the requirements of notice and hearing,
however in this case the requirements were not complied with, and therefore Maceda claims he
was deprived of due process.

In reaffirming the increase, the lower court ruled that Executive Order 172 does not preclude the
board from ordering ex-parte, a provisional increase.

These provisional increases, however, will be subject to final disposition of whether or not it
should be made permanent, to reduce or increase it, or to deny the application.

In fact, in the same order which authorized the provision increase, the ERB set the applications
for hearing with due notice to all interested parties. Petitioners Maceda failed to appear at said
hearing and at the second hearing. The notice of hearing was also published in newspapers of
general circulation.

Hearing for presentation of the evidence commences and the ERB outlined the procedure to be
observed in the reception of evidence — That the oppositors and the board must have all the
evidence-in-chief to be places on record first then the examination will come later and the cross-
examination willcome later.

Maceda claims that this order of relaxed procedure for presentation of proof resulted in a denial
of dueprocess because it deprived him of finishing his cross-examination of the witnesses.

ISSUE: Whether or not the decisions of the Energy Regulatory Board should be subject to
presidential review.

HELD:

Pursuant to Section 8 of E.O. No. 172, while hearing is indispensable, it does not preclude the
Board from ordering a provisional increase subject to final disposition of whether or not to make
it permanent or to reduce or increase it further or to deny the application.  The provisional
increase is akin to a temporary restraining order, which are given ex-parte.
The Court further noted the Solicitor General’s comments that “the ERB is not averse to the idea
of a presidential review of its decision,” except that there is no law at present authorizing the
same. 

The Court suggested that it will be under the scope of the legislative to allow the presidential
review of the decisions of the ERB since, despite its being a quasi-judicial body, it is still “ an
administrative body under the Office of the President whose decisions should be appealed to
the President under the established principle of exhaustion of administrative remedies,”
especially on a matter as transcendental as oil price increases which affect the lives of almost
all Filipinos.
US vs DORR
2 Phil 332
Administration as an Organization Distinguished from Government

FACTS:

Herein respondents were alleged to have committed an offense of writing, publishing and
circulating scurrilous libel against the Government of the U.S. and the Insular Government of the
Philippine Islands in violation of Section 8, Act 292 of the Commission.
The alleged libel was published as an editorial in the issue of the "Manila Freedom" of April 6,
1902, under the caption of" A few hard facts."

The editorial is about the appointment of rascal natives (Filipinos) to important Government
positions by the Civil Commission (CC for brevity). 
Article 292, section 8 has provided modes for committing an offense against it. However, albeit
the article has a virulent attack against the policy of the CC, the complaint in question cannot be
regarded as having a tendency to produce anything like what may be called disaffection or a
state of feeling incompatible with a disposition to remain loyal to the Government and obedient
to the laws.
There is a question as how the term “the Insular Government of the Phil. Islands”, is used in
Section 8, Art. 292. Is it defined as “the existing law and institutions of the Islands” or “the
aggregate of the individuals by whom the government of the Islands is administered”?
 
ISSUE: Whether the Article published by the respondents is in violation of the Art. 292 for it
directly attacks the U.S. government and the Insular Government of the Phil. Island?
 
RULING:
In modern political science, the term government is defined as “the institution or
aggregate of institutions by which an independent society makes and carries out
those rules…xxx…the government is the aggregation of authorities which rule a
society (administration)”.
On the other hand, the Sedition Act of 1798, the term ‘government’ is used in an
abstract sense (e.q. President, Congress), meaning the existing political system,
its laws and institutions. The Court opines that it is in this sense that the term is
used in the enactment (Art. 292) under consideration.
Hence, in Art. 292, the meaning of “Insular of the Government of the Phil. Islands” is the
government as a system, however, the article in questions attacks the ‘government’ as
the aggregate of public officials who run it.
The Court ruled that the article in question contains no attack upon the governmental
system of the U.S., by which the authority of the U.S. is enforced in these Islands per se.
In this case, it is the character of men who are entrusted with the administration of the
government which the writer wants to bring disrepute due to their motives, public
integrity, and private morals and wisdoms of their policy. The publication does not
constitute any seditious tendency being apparent to be in violation of Art. 292.
Respondents are acquitted.
RATIO: Government is the aggregate of authorities which rule a society. By "administration"
again, we understand in modern times, and especially in more or less free countries, the
aggregate of those persons in whose hands the reins of government are for the time being (the
chief ministers or heads of departments). The terms "government and ’’administration" are not
always used in their strictness, and that "government" is often used for ’’administration.’’
Malaga vs. Penachos (Digest)
Ma. Elena Malaga, et. al. vs. Manuel R. Penachos, Jr., et.al.
GR No. 86995 03 September 1992
Chartered Institution and GOCC, defined.

FACTS:
The Iloilo State College of Fisheries (ISCOF) through its Pre-qualifications, Bids and Awards
Committee (PBAC) caused the publication in the November 25, 26 and 28, 1988 issues of the
Western Visayas Daily an Invitation to Bid for the construction of a Micro Laboratory Building at
ISCOF. The notice announced that the last day for the submission of pre-qualification
requirements was on December 2, 1988, and that the bids would be received and opened on
December 12, 1988 at 3 o'clock in the afternoon.
Petitioners Malaga and Najarro, doing business under the name of BE Construction and Best
Built Construction, respectively, submitted their pre-qualification documents at two o'clock in the
afternoon of December 2, 1988. Petitioner Occeana submitted his own PRE-C1 on December 5,
1988. All three of them were not allowed to participate in the bidding as their documents were
considered late.
On December 12, 1988, the petitioners filed a complaint with the Iloilo RTC against the officers
of PBAC for their refusal without just cause to accept them resulting to their non-inclusion in the
list of pre-qualified bidders. They sought to the resetting of the December 12, 1988 bidding and
the acceptance of their documents. They also asked that if the bidding had already been
conducted, the defendants be directed not to award the project pending resolution of their
complaint.
On the same date, Judge Lebaquin issued a restraining order prohibiting PBAC from conducting
the bidding and award the project. The defendants filed a motion to lift the restraining order on
the ground that the court is prohibited from issuing such order, preliminary injunction and
preliminary mandatory injunction in government infrastructure project under Sec. 1 of P.D. 1818.
They also contended that the preliminary injunction had become moot and academic as it was
served after the bidding had been awarded and closed.
On January 2, 1989, the trial court lifted the restraining order and denied the petition for
preliminary injunction. It declared that the building sought to be constructed at the ISCOF was
an infrastructure project of the government falling within the coverage of the subject law.
ISSUE: Whether or not ISCOF is a government instrumentality subject to the provisions of PD
1818?
RULING: 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 term includes regulatory agencies, chartered institutions, and
government-owned or controlled corporations. (Sec. 2 (5) Introductory Provisions). The same
Code describes a chartered institution thus: Chartered institution - refers to any agency
organized or operating under a special charter, and vested by law with functions relating
to specific constitutional policies or objectives. This term includes the state universities
and colleges, and the monetary authority of the state. (Sec. 2 (12) Introductory Provisions).
It is clear from the above definitions that ISCOF is a chartered institution and is therefore
covered by P.D. 1818.
There are also indications in its charter that ISCOF is a government instrumentality.
First, it was created in pursuance of the integrated fisheries development policy of the State, a
priority program of the government to effect the socio-economic life of the nation.
Second, the Treasurer of the Republic of the Philippines shall also be the ex-officio Treasurer of
the state college with its accounts and expenses to be audited by the Commission on Audit or
its duly authorized representative.
Third, heads of bureaus and offices of the National Government are authorized to loan or
transfer to it, upon request of the president of the state college, such apparatus, equipment, or
supplies and even the services of such employees as can be spared without serious detriment
to public service.
Lastly, an additional amount of P1.5M had been appropriated out of the funds of the National
Treasury and it was also decreed in its charter that the funds and maintenance of the state
college would be included in the General Appropriations Law.
Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition in the
said decree as there are irregularities present surrounding the transaction that justified the
injunction issued as regards to the bidding and the award of the project (citing the case of
Datiles vs. Sucaldito).
Mactan Cebu International Airport Authority vs Marcos, et al.,
GR No 120082                                                
September 11, 1996

Facts:
Petitioner Mactan Cebu International Airport Authority (MCIAA) was created by
virtue of Republic Act No. 6958, mandated to “principally undertake the economical, efficient
and effective control, management and supervision of the Mactan International Airport in the
Province of Cebu and the Lahug Airport in Cebu City, and such other airports as may be
established in the Province of Cebu. Since the time of its creation, petitioner MCIAA
enjoyed the privilege of exemption from payment of realty taxes in accordance with
Section 14 of its Charter.
On October 11, 1994, however, the Office of the Treasurer of the City of Cebu,
demanded payment for realty taxes on several parcels of land belonging to the petitioner
located at Barrio Apas and Barrio Kasambagan, Lahug, Cebu City, in the total amount of
P2,229,078.79. Petitioner objected to such demand for payment as baseless and
unjustified, claiming in its favor the aforecited Section 14 of RA 6958 which exempts it from
payment of realty taxes.  It was also asserted that it is an instrumentality of the
government performing governmental functions, citing Section 133 of the Local
Government Code of 1991 which puts limitations on the taxing powers of local
government units.
Respondent City refused to cancel and set aside petitioner’s realty tax account,
insisting that the MCIAA is a government-controlled corporation whose tax exemption
privilege has been withdrawn by virtue of Sections 193 and 234 of the Local Government
Code that took effect on January 1, 1992.

ISSUE: W/N Petitioner is liable to is exempted from the payment of realty taxes.

RULING:

No. Taxation is the rule and exemption is the exception, the exemption may thus be
withdrawn at the pleasure of the taxing authority. As to tax exemptions or incentives granted to
or enjoyed by natural or juridical persons, including government- owned and controlled
corporations, section 193 of the LGC prescribes the general rule that they are withdrawn upon
the effectivity of the LGC, except those granted to local water districts, cooperatives, duly
registered under RA 6938, non stock and nonprofit hospitals and educational institutions
and unless otherwise provided in the LGC.
Here, MCIAA’s exemption from payment of taxes is withdrawn by virtue of Sections 193
and 234 of Local Government Code. Statutes granting tax exemptions shall be strictly construed
against the taxpayer and liberally construed in favor of the taxing authority.
The petitioner cannot claim that it was never a “taxable person” under its Charter. It was
only exempted from the payment of realty taxes. The grant of the privilege only in respect of this
tax is conclusive proof of the legislative intent to make it a taxable person subject to all taxes,
except real property tax.
MANILA INTERNATIONAL AIRPORT AUTHORITY vs. COURT OF APPEALS
G.R. No. 155650 July 20, 2006

FACTS:

The Manila International Airport Authority (MIAA) operates the Ninoy Aquino International
Airport (NAIA) Complex in Parañaque City under EO No. 903 (MIAA Charter), as amended. As such
operator, it administers the land, improvements and equipment within the NAIA Complex. In March
1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061 to the effect
that the Local Government Code of 1991 (LGC) withdrew the exemption from real estate tax
granted to MIAA under Section 21 of its Charter.

Thus, MIAA paid some of the real estate tax already due. In June 2001, it received Final
Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to
2001. The City Treasurer subsequently issued notices of levy and warrants of levy on the airport
lands and buildings.

At the instance of MIAA, the OGCC issued Opinion No. 147 clarifying Opinion No. 061, pointing
out that Sec. 206 of the LGC requires persons exempt from real estate tax to show proof of exemption.
According to the OGCC, Sec. 21 of the MIAA Charter is the proof that MIAA is exempt from real estate
tax. MIAA, thus, filed apetition with the Court of Appeals seeking to restrain the City of Parañaque
from imposing real estate tax on levying against, and auctioning for public sale the airport lands
and buildings, but this was dismissed for having been filed out of time.

Hence, MIAA filed a petition for review, pointing out that it is exempt from real estate tax
under Sec. 21of its charter and Sec. 234 of the LGC. It invokes the principle that the government
cannot tax itself as a justification for exemption, since the airport lands and buildings, being
devoted to public use and public service, are owned by the Republic of the Philippines.

On the other hand, the City of Parañaque invokes Sec. 193 of the LGC, whichexpressly
withdrew the tax exemption privileges of government-owned and controlled corporations (GOCC)
uponthe effectivity of the LGC.

It asserts that an international airport is not among the exceptions mentioned in the said
law. Meanwhile,the City of Parañaque posted and published notices announcing the public
auction sale of the airport lands andbuildings.

ISSUE: WON Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws?

HELD: YES.

1. MIAA is Not a Government-Owned or Controlled Corporation

MIAA is not a government-owned or controlled corporation but an instrumentality of the National

Government and thus exempt from local taxation.

MIAA is not a stock corporation because it has no capital stock (at least 51%) divided into shares. MIAA
has no stockholders or voting shares.

MIAA is also not a non-stock corporation because it has no members. A non-stock corporation must have
members.

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.

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 this Executive
Order.”

2. Airport Lands and Buildings of MIAA are Owned by the Republic

a. Airport Lands and Buildings are of Public Dominion

The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the
State or the Republic of the Philippines.

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like
“roads, canals, rivers, torrents, ports and bridges constructed by the State,” are owned by the State. The
term “ports” includes seaports and airports. The MIAA Airport Lands and Buildings constitute a “port”
constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are
properties of public dominion and thus owned by the State or the Republic of the Philippines.

The Airport Lands and Buildings are devoted to public use because they are used by the public for
international and domestic travel and transportation. The fact that the MIAA collects terminal fees and
other charges from the public does not remove the character of the Airport Lands and Buildings as
properties for public use.

The charging of fees to the public does not determine the character of the property whether it is of public
dominion or not. Article 420 of the Civil Code defines property of public dominion as one “intended for
public use.” The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to
airlines, constitute the bulk of the income that maintains the operations of MIAA. The collection of such
fees does not change the character of MIAA as an airport for public use. Such fees are often termed
user’s tax. This means taxing those among the public who actually use a public facility instead of taxing
all the public including those who never use the particular public facility.

b. Airport Lands and Buildings are Outside the Commerce of Man

The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be
the subject of an auction sale.

Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition
through public or private sale. Any encumbrance, levy on execution or auction sale of any property of
public dominion is void for being contrary to public policy. Essential public services will stop if properties
of public dominion are subject to encumbrances, foreclosures and auction sale. This will happen if the
City of Parañaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for
non-payment of real estate tax.

c. MIAA is a Mere Trustee of the Republic

MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48,
Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real
properties owned by the Republic. n MIAA’s case, its status as a mere trustee of the Airport Lands and
Buildings is clearer because even its executive head cannot sign the deed of conveyance on behalf of the
Republic. Only the President of the Republic can sign such deed of conveyance.

d. Transfer to MIAA was Meant to Implement a Reorganization

The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not
meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose was
merely toreorganize a division in the Bureau of Air Transportation into a separate and autonomous body.
The Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is owned solely
by the Republic. No party claims any ownership rights over MIAA’s assets adverse to the Republic.

e. Real Property Owned by the Republic is Not Taxable

Sec 234 of the LGC provides that real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person following are exempted from payment of the real property tax.

However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt
from real estate tax. For example, the land area occupied by hangars that MIAA leases to private
corporations is subject to real estate tax.
MCIAA v Pasay

FACTS:
Petitioner Manila International Airport Authority (MIAA) operates and administers the
Ninoy Aquino International Airport (NAIA) Complex under Executive Order No. 903 (EO 903),
otherwise known as the Revised Charter of the Manila International Airport Authority. 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. The City of Pasay, through its City Treasurer, issued
notices of levy and warrants of levy for the NAIA Pasay properties which the MIAA received on
28 August 2001.

Thereafter, the City Mayot of Pasay threatened to sell at public auction the NAIA Pasay
properties if the delinquent and real property taxes remain unpaid.

Petitioner filed with the CA a petition for prohibition and injuction with prayer for
preliminary injuction or TRO, to enjoin the City of Pasay from imposing real property taxes on,
levying against, and auctioning for public sale the NAIA Pasay properties. The CA dismissed the
petition and upheld the poer of the City of Pasay to impose and collect realty taxes on the NAIA
Pasay properties, stating that the Local Government Code, withdrew the exemption from
payment of real property taxes granted to atural or juridical persons, including GOCCs, except
local water districts, cooperatives, non-stock and non-profit hospitals and educational
institutions.

Hence, this petition.

ISSUE: WON the NAIA Pasay properties of MIAA are exempt from real property tax.

HELD: YES.

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 the1987 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. The exception to the
exemption in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under
the Local Government Code. Such exception applies only if the beneficial use of real property
owned by the Republic is given to a taxable entity.
Hence, MIAA is not liable to pay real property tax for the NAIA Pasay properties.
Mactan Cebu International Airport Authority vs City of Lapu-Lapu
G.R. No. 181756. June 15, 2015

Facts:
Petitioner Mactan-Cebu International Airport Authority (MCIAA) was created by
Congress to undertake the effective control and management and supervision of the Mactan
International Airport, Lahug Airport, and other airports as may be established by the Province of
Cebu. MCIAA enjoyed exemption from realty taxes as per RA 6958. However, the Supreme
Court ruled in another case that MCIAA was no longer exempt from real estate taxes upon the
effectivity of the Local Government Code of 1991.

Respondent City issued to MCIAA a Statement of Real Estate Tax assessment over the
lots of Mactan International Airport. But the Petitioner contends that the said lots are solely
utilized and exclusively for public purposes and should be exempt from real property tax.
However, Respondent still issued notices of levy on the 18 sets of real properties of petitioner.

Petitioner filed a petition before the RTC of Lapu-lapu City when it discovered that
respondent City did not pass any ordinance authorizing the collection of real property tax, a tax
for the special education fund (SEF), and a penalty interest for its nonpayment. Petitioner
argued that without the corresponding tax ordinances, respondent City could not impose and
collect real property tax, an additional tax for the SEF, and penalty interest from petitioner.

RTC ruled in favor of the petitioners but it was subsequently lifted by the RTC. On
appeal, the CA ruled that petitioner’s airport terminal building, airfield, runway, taxiway, and the
lots on which they are situated are not exempt from real estate tax because as stated in the
LGC, all natural and juridical persons, including GOCCs, instrumentalities and agencies, are no
longer exempt from local taxes even if previously granted an exemption. The only exemptions
from local taxes are those specifically provided under the Code itself, or those enacted through
subsequent legislation.

ISSUE: WON the petitioner is a government instrumentality exempt from paying real property
taxes.

HELD: YES.
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 the1987 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. The
exception to the exemption in Section 234(a) does not apply to MIAA because MIAA is not a
taxable entity under the Local Government Code. Such exception applies only if the beneficial
use of real property owned by the Republic is given to a taxable entity.

Finally, The airport lands and buildings of MCIAA are properties of public dominion
because they are intended for public use. As properties of public dominion, they indisputably
belong to the State or the Republic of the Philippines, and are outside the commerce of man.
This, unless petitioner leases its real property to a taxable person, the specific property leased
becomes subject to real property tax; in which case, only those portions of petitioner's
properties which are leased to taxable persons like private parties are subject to real property
tax by the City of Lapu-Lapu. 
LRTA
FACTS:

Pursuant to EO No. 603, the Light Rail Transit Authority (LRTA) was created primarily to
construct, operate, maintain, and/or lease the light rail transit system of the country. For this
purpose, the LRTA acquired real properties and commenced its operations in 1984.

On October 2000, the Court rendered its decision in LRTA v. Central Board of
Assessment Appeals (CBOA) that the LRTA's properties had already been classified by law
as patrimonial property subject to tax. The LRTA received several Statements of
Delinquency and Final Notices of Tax Delinquency from respondent Quezon City. The
LRTA informed Quezon City that pursuant to the subsequent case of MIAA v. Court of
Appeals, the LRTA is a government instrumentality, thus, exempt from real property tax.
Despite its continuous communication with the LRTA, however, Quezon City did not stop
sending notices to the former for collection of realty taxes of P515,204,769.13.

LRTA filed a petition against Quezon City before the RTC invoking that it is a
government instrumentality, hence, exempt from real property tax. Quezon City countered that
the LRTA is not a government instrumentality but a government-owned and controlled
corporation (GOCC). Its activities are proprietary in nature and not purely governmental. EO 603
does not exempt the LRTA from real property taxes and the LGC of 1991 has removed or
withdrawn the tax exemptions of GOCCs, thus, LRTA is a taxable entity.

The RTC dismissed the petition and it held that the LRTA properties are taxable based
on the Local Government Code and the Constitution.

ISSUE: WON LRTA is a government instrumentality exempt from paying real property taxes.

RULING: YES.

The LRTA is not a GOCC. An agency is a government-owned or controlled corporation

when it is organized as a stock or non-stock corporation. The LRTA has statutory capital - but
not capital stock or share capital, which is not divided into shares of stock. It has neither
stockholders nor voting shares, hence, it is not a stock corporation. The LRTA is also not a non-
stock corporation because it has no members and a non-stock corporation must have members.
Even if we assume that the government is considered as the sole member of the LRTA, this will
not make the LRTA a non-stock corporation because as a public utility, it is organized to operate
the light rail transit system for public use and not for the purposes stated in Section 88 of
the Corporation Code.

The LRTA is a government instrumentality exercising corporate powers. An agency will

be classified as a government instrumentality vested with corporate powers when the following
elements concur: a) it performs governmental functions, and b) it enjoys operational autonomy.
It does not matter that the government instrumentality is endowed with corporate powers. Here,
the LRTA bears the elemental characteristics of a government instrumentality vested with
corporate powers.
One. The vesture of its corporate powers is found in Article 2 of Executive Order 603
otherwise known as "Creating a Light Rail Transit Authority, Vesting the same with Authority to
Construct and Operate the Light Rail Transit (LRT) project and providing funds therefor,"
 Two. The LRTA performs governmental functions. It is primarily responsible for the
construction, operation, maintenance, and/or lease of light rail transit systems in the country,
giving due regard to the reasonable requirements of the public transportation system of the
country.
Three. The LRTA also enjoys operational autonomy, as it exists by virtue of a Charter,
and its powers and functions are vested in and exercised by its Board of Directors.

Therefore the SC ruled that the LRTA and its properties utilized in relation to the
establishment, operation, maintenance, and viability of the light rail transit in the country
are EXEMPT from real property taxes.

In 2011, RA No. 10149, the GOCC Governance Act of 2011 was passed into law adopting such new
category under EO 596:

(n) Government Instrumentalities with Corporate Powers (GICP)/Government

Corporate Entities (GCE) refer to instrumentalities or agencies of the government, which are neither
corporations nor agencies integrated within the departmental framework, but vested by law with special
functions or jurisdiction, endowed with some if not all corporate powers, administering special funds, and
enjoying operational autonomy usually through a charter including, but not limited to, the following: the
 Manila International Airport Authority (MIAA),
 Philippine Ports Authority (PPA),
 Philippine Deposit Insurance Corporation (PDIC),
 Metropolitan Waterworks and Sewerage System (MWSS),
 Laguna Lake Development Authority (LLDA),
 Philippine Fisheries Development Authority (PFDA),
 Bases Conversion and Development Authority (BCDA),
 Cebu Port Authority (CPA),
 Cagayan de Oro Port Authority,
 San Fernando Port Authority,
 Local Water Utilities Administration (LWUA)
 Asian Productivity Organization (APO).

Thus, the classification of Government Instrumentalities with Corporate Powers

(GICP)/Government Corporate Entities is now officially recognized.
GUALBERTO J. DE LA LLANA Presiding Judge, Branch II of the City Court of Olongapo,
ESTANISLAO L. CESA, JR., FIDELA Y. VARGAS, BENJAMIN C. ESCOLANGO, JUANITO C.
ATIENZA, MANUEL REYES ROSAPAPAN, JR., VIRGILIO E. ACIERTO, and PORFIRIO AGUILLON
AGUILA, petitioners vs. Alba (1982)
Subject: The abolition of an office does not amount to an illegal removal of its incumbent,
however, in order to be valid, the abolition must be made in good faith.
FACTS:
De la Llana, who is a presiding judge of the City Court of Olongapo, together with
other petitioners seek to enjoin respondent Minister of the Budget, Chairman of the
Commission on Audit, and respondent Minister of Justice from taking any action
implementing BP129 “An Act Reorganizing Judiciary, Appropriating Funds Therefor and for
Other Purposes”.
It mandates that Justices and Judges of inferior courts from CA to municipal circuit
courts would be considered separated from judiciary. Due to the termination of their
incumbency, petitioners alleged that the security of tenure provision of the Constitution has
been ignored and disregarded. The Solicitor General pointed out that there is no valid
justification for the attack on the constitutionality of the statute, because it is a legitimate
exercise of the power vested in the Batasang Pambansa to reorganize the judiciary.

ISSUE: Was there lack of good faith in reorganizing the judiciary?

RULING: No. The Court held that there was good faith in reorganizing the judiciary.

The abolition of an office does not amount to an illegal removal of its incumbent,
however, in order to be valid, the abolition must be made in good faith.

Section 2, Article VIII of the Constitution vests in the National Assembly the power to define,
prescribe and apportion the jurisdiction of the various courts, subject to certain limitations in the case of the
Supreme Court. Section 9 of the same Article provides for the security of tenure of all the judges. The principles
embodied in these two sections of the same Article of the Constitution must be coordinated and harmonized.

Removal is to be distinguished from termination by virtue of the abolition of the

office. There can be no tenure to a non-existent office. After the abolition, there is in law
no occupant. In case of removal, there is an office with an occupant who would thereby
lose his position. Hence, there was no impairment of security of tenure. Nonetheless, for
the incumbents of inferior courts abolished, the effect is one of separation. As to its effect, no
distinction exists between removal and the abolition of the office. 

For the Batasang Pambansa, the establishment of such new inferior courts was
the appropriate response to the grave and urgent problems that pressed for solution. The
choice was for the Batasan to make, not for the SC, which deals only with the question of
power.

Here, the passage of BP129 was in good faith as it is for the fulfillment of what
was considered a great public need by the legislative department and the reorganization
statute was not enacted purposely to affect adversely the tenure of judges or of any
particular judge.
Thus, the Court held that the reorganization of the judiciary by virtue of BP 129
was done in good faith and the “separation” of the petitioner due to the abolition of his
office is valid and constitutional.
Canonizado vs. Aguirre
Subject: Security of tenure in the civil service; Abolition of a public office must be done in good
faith; Where one office is abolished and replaced with another office vested with similar
functions, the abolition is not in good faith and is invalid; RA 8551 did not abolish the contested
office, but merely declared them vacant; No implied abolition of office took place;
Reorganization, to be valid, must be done in good faith; No reorganization of NAPOLCOM;
Section 8, RA 8551 is unconstitutional; When a regular government employee is illegally
dismissed, his position never became vacant and he is considered as not having left his office

Facts:

The NAPOLCOM was originally created under RA No. 6075 (An Act Establishing The
Philippine National Police Under A Reorganized Department Of the Interior And Local
Government, And For Other Purposes”). Petitioners Edgar Dula Torre, Alexis Canonizado,
Rogelio Pureza and respondent Jose Adiong were members of the NAPOLCOM under RA
6975.
Dula Torres was first appointed on January 8, 1991 for a six year term and was
reappointed on January 23, 1997 for another 6 years. Canonizado was appointed on January
25, 1993 to serve the unexpired term of another Commissioner which ended on Dec. 31, 1995.
On Aug. 23, 1995, he was re-appointed for another 6 years. Pureza was appointed on Jan, 2,
1997 for similar term of 6 years. Respondent Adiong’s appointment was issued on July 23,
1996. None of their terms had expired at the time the amendatory law was passed.
On March 6, 1998, RA 8551 took effect and it declared that the terms of the current
Commissioners were deemed as expired upon its effectivity. Consequently, President Ramos
appointed Romeo Cairme on March 11, 1998 as member of the NAPOLCOM for full 6 year
term. Adiong was also given a term extension of 2 years since he had served less than 2 years
of his previous term. Completing the membership of the NAPOLCOM are Leo Magahum and
Cleofe Factoran.
Petitioners argue that their removal from office by virtue of Sec. 8 of RA 8551 violates
their security of tenure. Public respondents insist that the express declaration in Sec. 8 of RA
8551 that the terms of petitioners’ offices are deemed expire d discloses the legislative intent to
impliedly abolish NAPOLCOM created under RA 6975 pursuant to bona fide reorganization.

ISSUE: WON petitioners were removed by virtue of a valid abolition of their office by Congress?

RULING: NO. RA 8551 did not expressly abolish petitioners’ positions.

Security of tenure in the civil service

Petitioners are members of the civil service, which embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including government-owned or controlled
corporations with original charters. As such, they cannot be removed or suspended from office,
except for cause provided by law. The phrase "except for cause provided by law" refers to
"reasons which the law and sound public policy recognize as sufficient warrant for removal, that
is, legal cause, and not merely causes which the appointing power in the exercise of discretion
may deem sufficient."

Abolition of a public office must be done in good faith

The creation and abolition of public offices is primarily a legislative function. It is
acknowledged that Congress may abolish any office it creates without impairing the officer's
right to continue in the position held and that such power may be exercised for various reasons,
such as the lack of funds or in the interest of economy. However, in order for the abolition to be
valid, it must be made in good faith, not for political or personal reasons, or in order to
circumvent the constitutional security of tenure of civil service employees.

Where one office is abolished and replaced with another office vested with similar
functions, the abolition is not in good faith and is invalid; RA 8551 did not abolish the
contested office, but merely declared them vacant

Even if the legislature has the prerogative to abolish certain offices, it cannot be
conceded the power to simply pronounce those offices vacant and effectively remove the
occupants or holders from the civil service. Such an act would constitute, on its face,
an infringement of the constitutional guarantee of security of tenure , and will have to be
struck down on that account.
Congress may only be conceded this power if it is done pursuant to a bona fide abolition
of the NAPOLCOM.

RA 8551 expanded the membership of the NAPOLCOM from four to five

Commissioners by adding the Chief of the PNP as an ex-officio member. In addition, the
new law provided that three of the regular Commissioners shall come from the civilian
sector who are neither active nor former members of the police or military, and that the
fourth regular Commissioner shall come from the law enforcement sector either active or
retired. Furthermore, it is required that at least one of the Commissioners shall be a
woman. Again, such revisions do not constitute such essential changes in the nature of
the NAPOLCOM as to result in an implied abolition of such office.  It will be noted that
the organizational structure of the NAPOLCOM remains essentially the same and that,
except for the addition of the PNP Chief as ex-officio member, the composition of the
NAPOLCOM is also substantially identical under the two laws.

Finally, the powers and duties of the NAPOLCOM remain basically unchanged by
the amendments. Under the RA 8551, NAPOLCOM continues to exercise substantially the
same administrative, supervisory, rule-making, advisory and adjudicatory functions.

Reorganization takes place when there is an alteration of the existing structure of

government offices or units therein, including the lines of control, authority and responsibility
between them. However, for a reorganization to be valid, it must also pass the test of good faith.

As a general rule, a reorganization is carried out in "good faith" if it is for the

purpose of economy or to make bureaucracy more efficient. In that event, no dismissal (in
case of a dismissal) or separation actually occurs because the position itself ceases to exist. If
the "abolition" is done for political reasons or purposely to defeat security of tenure, or otherwise
not in good faith, no valid "abolition" takes place and whatever "abolition" is done, is void ab
initio.
When a regular government employee is illegally dismissed, his position never
became vacant and he is considered as not having left his office

Petitioners are thus entitled to be reinstated to office. It is of no moment that there are
now new appointees to the NAPOLCOM. It is a well-entrenched principle that when a regular
government employee is illegally dismissed, his position never became vacant under the law
and he is considered as not having left his office. The new appointments made in order to
replace petitioners are not valid.
Kapisanan Ng Mga Kawani Ng Energy Regulatory Board, petitioner,
vs.
Commissioner Fe B. Barin, of the Energy Regulatory Commission, respondents.

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

FACTS:
Section 38 of RA 9136 “EPIRA” (Electric Power Industry Reform Act of 2001), enacted
on 8 June 2001, provides for the abolition of the ERB and the creation of the ERC. 

The ERC was composed of Commissioner Barin and Deputy Commissioners Alindada,
Ibay, Butalid, and Colayco. On 17 October 2001, the Commissioners issued the guidelines for
the selection and hiring of ERC employees. A portion of the guidelines reflects the
Commissioners' view on the selection and hiring of the ERC employees vis-a-vis Civil Service
rules.

On 5 November 2005, KERB sent a letter to the Commissioners stating the KERB
members' objection to the Commissioners' stand that Civil Service laws, rules and regulations
have suppletory application in the selection and placement of the ERC employees. KERB
asserted that RA 9136 did not abolish the ERB or change the ERB's character as an economic
regulator of the electric power industry and insisted that RA 9136 merely changed the ERB's
name to the ERC and expanded the ERB's functions and objectives.

Commissioner Barin replied to KERB that the creation of a placement committee is no

longer necessary because there is already a prescribed set of guidelines for recruitment of
personnel and that the positions in the ERC do not need the prior approval of the CSC, as the
ERC is only required to submit the qualification standards to the CSC.

KERB, fearful of the uncertainty of the employment status of its members, filed a petition
to enjoin Termination of Petitioners ERB employees and seeks to declare Sec.38 of RA 9136,
which abolished the ERB and created the ERC, as unconstitutional and to prohibit the ERC
Commissioners from filling up the ERC's plantilla.

ISSUE: WON Section 38 of RA 9136 abolishing the ERB is constitutional.

RULING: YES. Section 38 of RA 9136 explicitly abolished the ERB.

Abolition of an office and its related positions is different from removal of an

incumbent from his office. Abolition and removal are mutually exclusive concepts.
From a legal standpoint, there is no occupant in an abolished office. Where there
is no occupant, there is no tenure to speak of. Thus, impairment of the
constitutional guarantee of security of tenure does not arise in the abolition of an
office. On the other hand, removal implies that the office and its related positions
subsist and that the occupants are merely separated from their positions.
 A valid order of abolition must not only come from a legitimate body, it must also
be made in good faith. An abolition is made in good faith when it is not made for
political or personal reasons, or when it does not circumvent the constitutional
security of tenure of civil service employees.  If one office is abolished and
replaced with another office vested with similar functions, the abolition is a legal
nullity.

After comparing the functions of the ERB and the ERC, the SC find that the ERC indeed
assumed the functions of the ERB. However, the overlap in the functions of the ERB and of the
ERC does not mean that there is no valid abolition of the ERB. The ERC has new and
expanded functions which are intended to meet the specific needs of a deregulated power
industry.

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

Therefore, because of the expansion of the ERC's functions and concerns, there was a valid
abolition of the ERB. 
CRISOSTOMO vs COURT OF APPEALS
Status and Characteristics
Creation, Reorganization, and Abolition of Administrative Agencies

FACTS:
Petitioner Isabelo Crisostomo was President of the Philippine College of Commerce
(PCC), appointed by the President on 1974. During his incumbency as president of the PCC,
two administrative cases were filed against petitioner, hence, he was preventively suspended
from office. In his place Dr. Mateo, Jr. was designated as officer-in-charge and then as Acting
President.

On April 1978, P.D. No. 1341 was issued by then President Marcos, Converting The
Philippine College Of Commerce Into A Polytechnic University, Defining Its Objectives,
Organizational Structure And Functions, And Expanding Its Curricular Offerings.

On July 1980, the Circuit Criminal Court of Manila rendered judgment acquitting
petitioner of the charges against him and was ordered reinstated to the position of President of
the Philippine College of Commerce (then PUP), from which he has been suspended. By virtue
of said reinstatement, he is entitled to receive the salaries and other benefits which he failed to
receive during suspension.

Petitioner then filed with the RTC a motion for execution of the judgment, ordering his
reinstatement to the position of president of the PUP and the payment of his salaries and other
benefits during the period of suspension. The motion was granted, however, President Corazon
Aquino appointed Dr. Gellor as acting president of the PUP, following the expiration of the term
of office of Dr. Prudente, who had succeeded Dr. Mateo.

The sheriff stated that he had executed the writ by installing petitioner as President of
the PUP but Dr. Gellor did not vacate the office as he wanted to consult with the President of
the Philippines first whcih led to a contempt citation against Dr. Gellor. Petitioner assumed the
office of president of the PUP.

The People of the Philippines filed a petition for certiorari and prohibition and also asked
for a TRO. The CA issued a TRO, enjoining petitioner to cease and desist from acting as
president of the PUP pursuant to the reinstatement orders of the trial court and ruled that the
PUP and the PCC are not "one and the same institution" but "two different entities" and that since
petitioner Crisostomo's term was coterminous with the legal existence of the PCC, petitioner's
term expired upon the abolition of the PCC. Hence this petition.
 Petitioner argues that P.D. No. 1341, which converted the PCC into the PUP, did not abolish
the PCC. He contends that if the law had intended the PCC to lose its existence, it would
have specified that the PCC was being "abolished" rather than "converted" and that if the
PUP was intended to be a new institution, the law would have said it was being "created."
Petitioner claims that the PUP is merely a continuation of the existence of the PCC, and,
hence, he could be reinstated to his former position as president.

ISSUE: WON the conversion of the PCC into PUP abolished the PCC

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

When the purpose is to abolish a department or an office or an organization and to

replace it with another one, the lawmaking authority says so.

The Court of Appeals also cited the provision of P.D. No. 1341 as allegedly implying the abolition of the PCC
and the creation of a new one - the PUP - in its stead.
§12. All parcels of land, buildings, equipment and facilities owned by the Philippine College of
Commerce and such other national schools as may be integrated by virtue of this decree, including
their obligations and appropriations thereof, shall stand transferred to the Polytechnic University of
the Philippines,  provided, however, that said national schools shall continue to receive their
corresponding shares from the special education fund of the municipal/provincial/city government
concerned as are now enjoyed by them in accordance with existing laws and/or decrees.

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

Reinstatement is no longer possible because of the promulgation of P.D. No. 1437

by the President of the Philippines on June 1978 fixing the term of office of presidents of
state universities and colleges at 6years, renewable for another term of 6years, and
authorizing the President of the Philippines to terminate the terms of incumbents who
were not reappointed.
In this case, Dr. Pablo T. Mateo Jr., who had been acting president of the
university since April 1979, was appointed president of PUP for a term of 6years, hence,
petitioner's term was cut short. Therefore, petitioner is entitled only to retirement
benefits or the payment of separation pay.

RATIO: When the purpose is to abolish a department or an office or an organization and

to replace it with another one, the lawmaking authority says so. What took place was a
change in academic status of the educational institution, not in its corporate life. Hence
the change in its name, the expansion of its curricular offerings, and the changes in its
structure and organization.
Viola vs. Alunan, et al. (1997)
Subject: Creation of additional positions is authorized by the Local Government Code; National Liga
ng mga Barangay has the power to create additional positions not only for its management but also
for chapters at the municipal, city, provincial and metropolitan political subdivision levels.

FACTS:

Petitioner Cesar Viola, barangay chairman of Brgy. 167, Zone 15, District II, Manila, brought
a petition for prohibition against then Secretary of Interior and Local Government Rafael M. Alunan
III, Alex L. David, president/secretary general of the National Liga ng mga Barangay, and Leonardo
L. Angat, president of the City of Manila Liga ng mga Barangay challenging the validity of Art. III, 1-2
of the Revised Implementing Rules and Guidelines for the General Elections of the Liga ng mga
Barangay Officers as they provide for the election of first, second and third vice presidents and for
auditors for the National Liga ng mga Barangay and its chapters

Petitioners contend that the positions in question are in excess of those provided in the Local
Government Code, Sec.493 of which mentions as elective positions only those of president, vice
president, and five members of the board of directors in each chapter at the municipal, city,
provincial, metropolitan political subdivision, and national levels. Petitioner argues that, in providing
for the positions of first, second and third vice presidents and auditor for each chapter, 1-2 of the
Implementing Rules expand the number of positions authorized in 493 of the Local Government
Code in violation of the principle that implementing rules and regulations cannot add or detract from
the provisions of the law they are designed to implement.

ISSUE: WON the additional positions in question have been created without authority of law.

RULING: No. The creation of these positions was made in the Constitution and By-laws
of the Liga ng Mga Barangay, which was adopted by the First Barangay National
Assembly on January 1994.

The post of executive vice president is in reality that of the vice president in 493 of the
LGC, so that the only additional positions created for each chapter in the Constitution
and By-laws are those of first, second and third vice presidents and auditor. Contrary to
petitioner’s contention, the creation of the additional positions is authorized by the LGC
which provides as follows:
493. Organization. The liga at the municipal, city, provincial, metropolitan political subdivision,
and national levels directly elect a president, a vice-president, and 5 members of the board of
directors. The board shall appoint its secretary and treasurer and create such other positions as it
may deem necessary for the management of the chapter. A secretary-general shall be elected
from among the members of the national liga and shall be charged with the overall operation of
the liga on the national level. The board shall coordinate the activities of the chapters of the liga.

This provision requires and not merely authorizes the board of directors to create
such other positions as it may deem necessary for the management of the chapter.
Congress can delegate the power to create positions such as these has been settled by
our decisions upholding the validity of reorganization statutes authorizing the President
of the Philippines to create, abolish or merge offices in the executive department. The
question is whether, in making a delegation of this power to the board of directors of each
chapter of the Liga ng Mga Barangay, Congress provided a sufficient standard so that
administrative discretion may be canalized within proper banks that keep it from overflowing.
The SC stated that Sec. 493 of the LGC, in directing the board of directors of the liga to
create such other positions as may be deemed necessary for the management of the
chapters, embodies a fairly intelligible standard. There is no undue delegation of power
by Congress.

RATIO: Congress can delegate the power to create positions such as these has been
settled by decisions upholding the validity of reorganization statutes authorizing the
President of the Philippines to create, abolish or merge offices in the executive
department.
Beja. Sr. vs. Court of Appeals G.R. No. 97149 31 March 1992

FACTS:
Fidencio Beja Sr. an employee of Philippine Ports Authority(PPA), hired as Arrastre
supervisor in 1975 and later on appointed as terminal supervisor in 1988.
On October 21, 1988, the General Manager, Rogelio Dayan filed administrative case
against Beja Sr. and Villaluz for grave dishonesty which they were preventively suspended for
the said charges. After preliminary investigation, the administrative case was considered closed
for lack of merit.
On December 1988 another administrative case was filed against Beja by the PPA
manager also for dishonesty grave misconduct violation of office rules and regulations, conduct
prejudicial to the best interest of the service and for being notoriously undesirable. Beja was
also placed under preventive suspension.
The case was redocketed and thereafter, the PPA indorsed it to the Administratuve
Action Board for appropriate action. The AAB proceeded to hear the case and gave Beja an
opportunity to present evidence. However, Beja filed petition for certiorari with preliminary
injunction before the RTC- Misamis Oriental.
Two days later, he filed with the ABB a manifestation and motion to suspend the hearing
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. Thereafter, Beja moved for the
dismissal of the certiorari case and proceeded to file before the Court for a petition for certiorari
with preliminary injunction and/or TRO.

ISSUE: WON the DOTC Secretary and/or AAB may initiate and hear administrative cases
against PPA Personnel below the rank of Asst. General Manager.
HELD: The SC ruled in favor of the petitioner
The PPA General Manager is the disciplining authority who may, by himself and without
the approval of the PPA Board of Directors, subject a respondent in an administrative case to
preventive suspension. His disciplining powers are sanctioned not only by Sec.8 of PD no. 857
but also by Sec. 37 of PD no. 807 granting the heads of agencies the “Jurisdiction to investigate
and decide matters involving disciplinary actions against officers and employees in the PPA.

The PPA was created through PD no.505 on 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 1975, PD no. 505 was substituted by PD no. 857 sec. 4(a)
which created the Philippine Ports Authority that would be attached to the then Department of Public Works,
Transportation and Communication. When EO no.125 on January 1987 was issued, reorganizing the Ministry
of Transportation and Communication, the PPA retained its attached status.

Administrative Code of 1987 classiffied PPA as an attached agency to the DOTC.

Book IV of the Administrative Code of 1987 defined “Attachment” as the “lateral
relationship between the department or its equivalent and the attached agency or
corporation for purposes of policy and program coordination”.
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 Law impliedly grants the general Manager with the approval of the PPA board of
Directors the power to investigate its personnel below the rank of Assistant Manager
who may be charged with an administrative offense. During such investigation, the PPA
General Manager, may subject the employee concerned to preventive suspension.
The investigation should be conducted in accordance with the procedure set out in Sec. 38 of
PD no. 807.

Hence, the decision of the CA is AFFIRMED as so far as it upholds the power of the PPA
General Manager to to subject petitioner to preventive suspension and REVERSED
insofar as it validates the jurisdiction of the DOTC and/or the AAB to act on the
administrative case (no. PPA –AAB-1-049-89). The AAB decision in said cased was
declared NULL and VOID and the case is REMANDED to the PPA whose General Manager
shall conduct with dispatch its reinvestigation.

DOCTRINE: An attached agency is free from departmental interference and control.

Eugenio v. CSC

FACTS:

Petitioner is the Deputy Director of the Philippine Nuclear Research Institute. She
applied for a Career Executive Service (CES) Eligibility and a CESO rank on August 1993. She
was given a CES eligibility and was recommended to the President for a CESO rank by the
Career Executive Service Board.

Then respondent Civil Service Commission passed a Resolution which abolished the CESB
(Career Executive Service Board), relying on the provisions of Section 17, Title I, Subtitle A. Book V of the
Administrative Code of 1987 allegedly conferring on the Commission the power and authority to effect
changes in its organization as the need arises. The said resolution states that:

The Career Executive Service Board, shall now be known as the Office for Career Executive
Service of the Civil Service Commission. Accordingly, the existing personnel, budget, properties
and equipment of the Career Executive Service Board now formed part of the Office for Career
Executive Service.

Finding herself bereft(deprived) of further administrative relief as the Career Executive Service
Board which recommended her CESO Rank IV has been abolished, petitioner filed the petition
at bench to annul the resolution..

ISSUE: WON the CSC usurped the legislative functions of Congress when it abolished CESB,
an office created by law, through the issuance of said Resolution.

RULING: Yes. The petition is granted and Resolution of the respondent Commission is annulled
and set aside.
The CESB was created by law, hence, it can only be abolished by the legislature. This
follows an unbroken stream of rulings that the creation and abolition of public offices is
primarily a legislative function.

Except for such offices as are created by the Constitution, the creation of public
offices is primarily a legislative function. In so far as the legislative power in this respect
is not restricted by constitutional provisions, it supreme, and the legislature may decide
for itself what offices are suitable, necessary, or convenient. When in the exigencies of
government it is necessary to create and define duties, the legislative department has the
discretion to determine whether additional offices shall be created, or whether these
duties shall be attached to and become ex-officio duties of existing offices. An office
created by the legislature is wholly within the power of that body, and it may prescribe
the mode of filling the office and the powers and duties of the incumbent, and if it sees
fit, abolish the office.

In this case, the legislature has not enacted any law authorizing the abolition of the
CESB. On the contrary, in all the General Appropriations Acts from 1975 to 1993, the legislature
has set aside funds for the operation of CESB. Respondent Commission's power to
reorganize is limited to offices under its control. From its inception, the CESB was
intended to be an autonomous entity, administratively attached to respondent
Commission. As conceptualized by the Reorganization Committee "the CESB shall be
autonomous. It is expected to view the problem of building up executive manpower in the
government with a broad and positive outlook." The essential autonomous character of the
CESB is not negated by its attachment to respondent Commission. By said attachment,
CESB was not made to fall within the control of respondent Commission. Under the
Administrative Code of 1987, the purpose of attaching one functionally inter-related
government agency to another is to attain "policy and program coordination."

RATIO: Attachment. — (a) This refers to the lateral relationship between the department or its
equivalent and attached agency or corporation for purposes of policy and program coordination.
The coordination may be accomplished by having the department represented in the governing
board of the attached agency or corporation, either as chairman or as a member, with or without
voting rights, if this is permitted by the charter; having the attached corporation or agency
comply with a system of periodic reporting which shall reflect the progress of programs and
projects; and having the department or its equivalent provide general policies through its
representative in the board, which shall serve as the framework for the internal policies of the
attached corporation or agency.