• G.R. No.

No. 103982 December 11, 1992 Section 699 of the RAC had been repealed by the Administrative Code of
1987, solely for the reason that the same section was not restated nor re-
ANTONIO A. MECANO, petitioner, enacted in the Administrative Code of 1987. He commented, however, that
vs. the claim may be filed with the Employees' Compensation Commission,
COMMISSION ON AUDIT, respondent. considering that the illness of Director Mecano occurred after the
effectivity of the Administrative Code of 1987.
CAMPOS, JR., J.:
Antonio A. Mecano, through a petition for certiorari, seeks to nullify the
Eventually, petitioner's claim was returned by Undersecretary of Justice
decision of the Commission on Audit (COA, for brevity) embodied in its
Eduardo Montenegro to Director Lim under a 9th Indorsement dated
7th Indorsement, dated January 16, 1992, denying his claim for
February 7, 1992, with the advice that petitioner "elevate the matter to the
reimbursement under Section 699 of the Revised Administrative Code
Supreme Court if he so desires".
(RAC), as amended, in the total amount of P40,831.00.

On the sole issue of whether or not the Administrative Code of 1987

Petitioner is a Director II of the National Bureau of Investigation (NBI). He
repealed or abrogated Section 699 of the RAC, this petition was brought
was hospitalized for cholecystitis from March 26, 1990 to April 7, 1990, on
for the consideration of this Court.
account of which he incurred medical and hospitalization expenses, the
total amount of which he is claiming from the COA.
Petitioner anchors his claim on Section 699 of the RAC, as amended, and
on the aforementioned Opinion No. 73, S. 1991 of Secretary Drilon. He
On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim
further maintains that in the event that a claim is filed with the Employees'
(Director Lim, for brevity), he requested reimbursement for his expenses
Compensation Commission, as suggested by respondent, he would still
on the ground that he is entitled to the benefits under Section 6991 of the
not be barred from filing a claim under the subject section. Thus, the
RAC, the pertinent provisions of which read:
resolution of whether or not there was a repeal of the Revised
Administrative Code of 1917 would decide the fate of petitioner's claim for
Sec. 699. Allowances in case of injury, death, or reimbursement.
sickness incurred in performance of duty. — When a
person in the service of the national government of a
The COA, on the other hand, strongly maintains that the enactment of the
province, city, municipality or municipal district is so
Administrative Code of 1987 (Exec. Order No. 292) operated to revoke or
injured in the performance of duty as thereby to
supplant in its entirety the Revised Administrative Code of 1917. The COA
receive some actual physical hurt or wound, the
claims that from the "whereas" clauses of the new Administrative Code, it
proper Head of Department may direct that absence
can be gleaned that it was the intent of the legislature to repeal the old
during any period of disability thereby occasioned
Code. Moreover, the COA questions the applicability of the aforesaid
shall be on full pay, though not more than six months,
opinion of the Secretary of Justice in deciding the matter. Lastly, the COA
and in such case he may in his discretion also
contends that employment-related sickness, injury or death is adequately
authorize the payment of the medical attendance,
covered by the Employees' Compensation Program under P.D. 626, such
necessary transportation, subsistence and hospital
that to allow simultaneous recovery of benefits under both laws on account
fees of the injured person. Absence in the case
of the same contingency would be unfair and unjust to the Government.
contemplated shall be charged first against vacation
leave, if any there be.
The question of whether a particular law has been repealed or not by a
subsequent law is a matter of legislative intent. The lawmakers may
xxx xxx xxx
expressly repeal a law by incorporating therein a repealing provision which
expressly and specifically cites the particular law or laws, and portions
In case of sickness caused by or connected directly thereof, that are intended to be repealed. 3 A declaration in a statute,
with the performance of some act in the line of duty, usually in its repealing clause, that a particular and specific law, identified
the Department head may in his discretion authorize by its number or title, is repealed is an express repeal; all others are
the payment of the necessary hospital fees. implied repeals.4

Director Lim then forwarded petitioner's claim, in a 1st Indorsement dated In the case of the two Administrative Codes in question, the ascertainment
June 22, 1990, to the Secretary of Justice, along with the comment, of whether or not it was the intent of the legislature to supplant the old
bearing the same date, of Gerarda Galang, Chief, LED of the NBI, Code with the new Code partly depends on the scrutiny of the repealing
"recommending favorable action thereof". Finding petitioner's illness to be clause of the new Code. This provision is found in Section 27, Book VII
service-connected, the Committee on Physical Examination of the (Final Provisions) of the Administrative Code of 1987 which reads:
Department of Justice favorably recommended the payment of petitioner's
claim.
Sec. 27. Repealing Clause. — All laws, decrees,
orders, rules and regulations, or portions thereof,
However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th inconsistent with this Code are hereby repealed or
Indorsement dated November 21, 1990, returned petitioner's claim to modified accordingly.
Director Lim, having considered the statements of the Chairman of the
COA in its 5th Indorsement dated 19 September 1990, to the effect that
The question that should be asked is: What is the nature of this repealing
the RAC being relied upon was repealed by the Administrative Code of
clause? It is certainly not an express repealing clause because it fails to
1987.
identify or designate the act or acts that are intended to be
repealed.5 Rather, it is an example of a general repealing provision, as
Petitioner then re-submitted his claim to Director Lim, with a copy of stated in Opinion No. 73, S. 1991. It is a clause which predicates the
Opinion No. 73, S. 19912 dated April 26, 1991 of then Secretary of Justice intended repeal under the condition that substantial conflict must be found
Franklin M. Drilon (Secretary Drilon, for brevity) stating that "the issuance in existing and prior acts. The failure to add a specific repealing clause
of the Administrative Code did not operate to repeal or abregate in its indicates that the intent was not to repeal any existing law, unless an
entirety the Revised Administrative Code, including the particular Section irreconcilable inconcistency and repugnancy exist in the terms of the new
699 of the latter". and old laws.6 This latter situation falls under the category of an implied
repeal.
On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew
Mecano's claim to then Undersecretary Bello for favorable consideration. Repeal by implication proceeds on the premise that where a statute of
Under a 6th Indorsement, dated July 2, 1991, Secretary Drilon forwarded later date clearly reveals an intention on the part of the legislature to
petitioner's claim to the COA Chairman, recommending payment of the abrogate a prior act on the subject, that intention must be given
same. COA Chairman Eufemio C. Domingo, in his 7th Indorsement of effect.7 Hence, before there can be a repeal, there must be a clear
January 16, 1992, however, denied petitioner's claim on the ground that showing on the part of the lawmaker that the intent in enacting the new
law was to abrogate the old one. The intention to repeal must be clear and provisions of the prior act that are omitted from the revised act are deemed
manifest;8 otherwise, at least, as a general rule, the later act is to be repealed.15 Furthermore, before there can be an implied repeal under this
construed as a continuation of, and not a substitute for, the first act and category, it must be the clear intent of the legislature that the later act be
will continue so far as the two acts are the same from the time of the first the substitute to the prior act.16
enactment.9
According to Opinion No. 73, S. 1991 of the Secretary of Justice, what
There are two categories of repeal by implication. The first is where appears clear is the intent to cover only those aspects of government that
provisions in the two acts on the same subject matter are in an pertain to administration, organization and procedure, understandably
irreconcilable conflict, the later act to the extent of the conflict constitutes because of the many changes that transpired in the government structure
an implied repeal of the earlier one. The second is if the later act covers since the enactment of the RAC decades of years ago. The COA
the whole subject of the earlier one and is clearly intended as a substitute, challenges the weight that this opinion carries in the determination of this
it will operate to repeal the earlier law.10 controversy inasmuch as the body which had been entrusted with the
implementation of this particular provision has already rendered its
decision. The COA relied on the rule in administrative law enunciated in
Implied repeal by irreconcilable inconsistency takes place when the two
the case of Sison vs. Pangramuyen17 that in the absence of palpable error
statutes cover the same subject matter; they are so clearly inconsistent
or grave abuse of discretion, the Court would be loathe to substitute its
and incompatible with each other that they cannot be reconciled or
own judgment for that of the administrative agency entrusted with the
harmonized; and both cannot be given effect, that is, that one law cannot
enforcement and implementation of the law. This will not hold water. This
be enforced without nullifying the other.11
principle is subject to limitations. Administrative decisions may be
reviewed by the courts upon a showing that the decision is vitiated by
Comparing the two Codes, it is apparent that the new Code does not cover fraud, imposition or mistake.18 It has been held that Opinions of the
nor attempt to cover the entire subject matter of the old Code. There are Secretary and Undersecretary of Justice are material in the construction
several matters treated in the old Code which are not found in the new of statutes in pari materia.19
Code, such as the provisions on notaries public, the leave law, the public
bonding law, military reservations, claims for sickness benefits under
Lastly, it is a well-settled rule of statutory construction that repeals of
Section 699, and still others.
statutes by implication are not favored.20 The presumption is against
inconsistency and repugnancy for the legislature is presumed to know the
Moreover, the COA failed to demonstrate that the provisions of the two existing laws on the subject and not to have enacted inconsistent or
Codes on the matter of the subject claim are in an irreconcilable conflict. conflicting statutes.21
In fact, there can be no such conflict because the provision on sickness
benefits of the nature being claimed by petitioner has not been restated in
This Court, in a case, explains the principle in detail as follows: "Repeals
the Administrative Code of 1987. However, the COA would have Us
by implication are not favored, and will not be decreed unless it is manifest
consider that the fact that Section 699 was not restated in the
that the legislature so intended. As laws are presumed to be passed with
Administrative Code of 1987 meant that the same section had been
deliberation with full knowledge of all existing ones on the subject, it is but
repealed. It further maintained that to allow the particular provisions not
reasonable to conclude that in passing a statute it was not intended to
restated in the new Code to continue in force argues against the Code
interfere with or abrogate any former law relating to some matter, unless
itself. The COA anchored this argument on the whereas clause of the 1987
the repugnancy between the two is not only irreconcilable, but also clear
Code, which states:
and convincing, and flowing necessarily from the language used, unless
the later act fully embraces the subject matter of the earlier, or unless the
WHEREAS, the effectiveness of the Government will reason for the earlier act is beyond peradventure renewed. Hence, every
be enhanced by a new Administrative Code which effort must be used to make all acts stand and if, by any reasonable
incorporate in a unified document the major construction, they can be reconciled, the later act will not operate as a
structural, functional and procedural principles and repeal of the earlier.22
rules of governance; and
Regarding respondent's contention that recovery under this subject
xxx xxx xxx section shall bar the recovery of benefits under the Employees'
Compensation Program, the same cannot be upheld. The second
sentence of Article 173, Chapter II, Title II (dealing on Employees'
It argues, in effect, that what is contemplated is only one Code — the
Compensation and State Insurance Fund), Book IV of the Labor Code, as
Administrative Code of 1987. This contention is untenable. amended by P.D. 1921, expressly provides that "the payment of
compensation under this Title shall not bar the recovery of benefits as
The fact that a later enactment may relate to the same subject matter as provided for in Section 699 of the Revised Administrative Code . . . whose
that of an earlier statute is not of itself sufficient to cause an implied repeal benefits are administered by the system (meaning SSS or GSIS) or by
of the prior act, since the new statute may merely be cumulative or a other agencies of the government."
continuation of the old one. 12 What is necessary is a manifest indication
of legislative purpose to repeal.13 WHEREFORE, premises considered, the Court resolves to GRANT the
petition; respondent is hereby ordered to give due course to petitioner's
We come now to the second category of repeal — the enactment of a claim for benefits. No costs.
statute revising or codifying the former laws on the whole subject matter.
This is only possible if the revised statute or code was intended to cover SO ORDERED.
the whole subject to be a complete and perfect system in itself. It is the
rule that a subsequent statute is deemed to repeal a prior law if the former
revises the whole subject matter of the former statute. 14 When both intent
and scope clearly evidence the idea of a repeal, then all parts and
 • G.R. No. L-66614 January 25, 1988 Republic of the Philippines,
represented by Defendant Civil
PRIMITIVO LEVERIZA, FE LEVERIZA, PARUNGAO & ANTONIO C. Aeronautics Administration and
VASCO, petitioners, Rosario C. Leveriza over a
vs. parcel of land containing an area
INTERMEDIATE APPELLATE COURT, MOBIL OIL PHILIPPINES & of 4,502 square meters, for 25
CIVIL AERONAUTICS ADMINISTRATION, respondents. years.

BIDIN, J.:
Contract B — a lease contract
(in effect a sublease) of May 21,
This is a Petition for Review on certiorari seeking the reversal of the 1965 between defendant
decision of the Intermediate Appellate Court, Third Division * dated Rosario C. Leveriza and plaintiff
February 29, 1984 in AC-G.R. No. CV No. 61705 entitled Mobil Oil Mobil Oil Philippines, Inc. over
Philippines, Inc., plaintiff-appellee vs. Primitivo Leveriza Parungao, the same parcel of land, but
Antonio C. Vasco and Civil Aeronautics Administration, defendants- reduced to 3,000 square meters
appellants; Primitive Leveriza, Fe Leveriza Parungao and Antonio C. for 25 years; and
Leveriza, cross-defendant, affirming in toto the decision of the trial court
dated April 6, 1976.
Contract C — a lease contract of
June 1, 1968 between defendant
As found by the trial court and adopted by the Intermediate Appellate Civil Aeronautics Administration
Court, the facts of this case are as follows: and plaintiff Mobil Oil
Philippines, Inc., over the same
parcel of land, but reduced to
Around three contracts of lease resolve the basic 3,000 square meters, for 25
issues in the instant case. These three contracts are years.
as follows:

It is important to note, for a clear understanding of the

First Contract. — For purposes of easy reference and issues involved, that it appears that defendant Civil
brevity, this contract shall be referred to hereinafter Aeronautics Administration as LESSOR, leased the
as Contract A. This is a "CONTRACT OF LEASE", same parcel of land, for durations of time that
executed between the REPUBLIC OF THE overlapped to two lessees, to wit: (1) Defendant
PHILIPPINES, represented by Defendant CIVIL Rosario C. Leveriza, and that plaintiff Mobil Oil
AERONAUTICS ADMINISTRATION, as lessor, and Philippines, Inc., as LESSEE, leased the same parcel
ROSARIO C. LEVERIZA, as lessee, on April 2, 1965, of land from two lessors, to wit: (1) defendant Rosario
over a certain parcel of land at the MIA area, C. Leveriza and (2) defendant Civil Aeronautics
consisting of approximately 4,502 square meters, at Administration, Inc., for durations of time that also
a monthly rental of P450.20, for a period of 25 years, overlapped.
(Exhibit "A", Exhibit "I-Leverizas", Exhibit "I-CAA").

For purposes of brevity defendant Civil Aeronautics

Second Contracts. — For purposes of easy Administration shall be referred to hereinafter as
references and brevity, this contract shall be referred defendant CAA.
to hereinafter as Contract B. This is a "LEASE
AGREEMENT", executed between ROSARIO C.
LEVERIZA, as lessor, and Plaintiff MOBIL OIL Rosario C. Leveriza, the lessee in Contract A and the
PHILIPPINES, INC., as lessee on May 21, 1965, over lessor in Contract B, is now deceased. This is the
3,000 square meters of that SAME Parcel of land reason why her successor-in-interest, her heirs, are
subject of Contract A above mentioned, at a monthly sued, namely: Defendants Primitive Leveriza, her
rental of P1,500.00, for a period of 25 years (Exhibit second husband, (now also deceased), Fe Leveriza
'B', Exhibit 4-Leverizas' ). Parungao, her daughter by her second husband, and
Antonio C. Vasco, her son by her first husband. For
purposes of brevity, these defendants shall be
Third Contract. — For purposes of easy reference referred to hereinafter as Defendants Leveriza.
and brevity, this contract shall be referred to
hereinafter as Contract C. This is a "LEASE
AGREEMENT", executed between Defendant CIVIL Plaintiff Mobil Oil Philippines, Inc., shall be referred to
AERONAUTICS ADMINISTRATION, as lessor, and hereinafter simply as the Plaintiff. (pp. 95-99, Record
plaintiff MOBIL OIL PHILIPPINES, INC., as lessee, on Appeal).
on June 1, 1968 over that SAME parcel of land (Lot
A, on plan being a portion of Parcel, Psu 2031),
Plaintiff in this case seeks the rescission or
containing an area of 3,000 square meters more or
cancellation of Contract A and Contract B on the
less, at a monthly rental of P.25 per square meter for
ground that Contract A from which Contract B is
the second 200 square meters, and P.20 per square
derived and depends has already been cancelled by
meter for the rest, for a period of 29 (sic) years.
the defendant Civil Aeronautics Administration and
(Exhibit "C").
maintains that Contract C with the defendant CAA is
the only valid and subsisting contract insofar as the
There is no dispute among the parties that the subject parcel of land, subject to the present litigation is
matter of the three contracts of lease above concerned. On the other hand, defendants Leverizas'
mentioned, Contract A, Contract B, and Contract C, claim that Contract A which is their contract with CAA
is the same parcel of land, with the noted difference has never been legally cancelled and still valid and
that while in Contract A, the area leased is 4,502 subsisting; that it is Contract C between plaintiff and
square meters, in Contract B and Contract C, the area defendant CAA which should be declared void.
has been reduced to 3,000 square meters. To
summarize:
Defendant CAA asserts that Exhibit "A" is still valid
and subsisting because its cancellation by Guillermo
Contract A — a lease contract of Jurado was ineffective and asks the court to annul
April 2, 1965 between the Contract A because of the violation committed by
 defendant Leveriza in leasing the parcel of land to On appeal, the Intermediate Appellate Court, being in full accord with the
plaintiff by virtue of Contract B without the consent of trial court, rendered a decision on February 29, 1984, the dispositive part
defendant CAA. Defendant CAA further asserts that of which reads:
Contract C not having been approved by the Director
of Public Works and Communications is not valid. ...
WHEREFORE, finding no reversible error in the decision of the
lower court dated April 6, 1976, the same is hereby affirmed
xxx xxx xxx in toto.

After trial, the lower court render judgment on April 6, 1976 the dispositive Hence, this petition.
part of which reads:
The petitioners raised the following assignment of errors:
WHEREFORE, after having thus considered the evidence of all the
parties, testimonial and documentary, and their
I
memoranda and reply-memoranda, this Court hereby
renders judgment:
THE INTERMEDIATE APPELLATE COURT ERRED IN
HOLDING THAT THE ADMINISTRATOR OF THE CIVIL
1. Declaring Contract A as having been validly cancelled on
AERONAUTICS ADMINISTRATION (CAA) HAD THE
June 28, 1966, and has
STATUTORY AUTHORITY TO LEASE, EVEN WITHOUT
therefore ceased to have any
APPROVAL OF THE THEN SECRETARY OF PUBLIC WORKS
effect as of that date;
AND COMMUNICATIONS, REAL PROPERTY BELONGING
TO THE REPUBLIC OF THE PHILIPPINES.
2. Declaring that Contract B has likewise ceased to have any
effect as of June 28, 1966
II
because of the cancellation of
Contract A;
THE INTERMEDIATE APPELLATE COURT ERRED IN
HOLDING THAT THE ADMINISTRATOR OF THE CIVIL
3. Declaring that Contract C was validly entered into on June
AERONAUTICS ADMINISTRATION HAD STATUTORY
1, 1968, and that it is still valid
AUTHORITY, WITHOUT THE APPROVAL OF THE THEN
and subsisting;
SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS,
TO CANCEL A LEASE CONTRACT OVER REAL PROPERTY
4. Ordering defendant CAA to refund to defendants Leverizas OWNED BY THE REPUBLIC OF THE PHILIPPINES, WHICH
the amount of P32,189.30 with CONTRACT WAS APPROVED, AS REQUIRED BY LAW, BY
6% per annum until fully paid; THE SECRETARY.

5. Ordering defendants Leverizas to refund to plaintiff the III

amount of P48,000.00 with 6%
interest per annum until fully
THE INTERMEDIATE APPELLATE COURT ERRED WHEN IT
paid;
RULED THAT THE CONTRACT OF SUBLEASE (CONTRACT
B) ENTERED INTO BETWEEN PETITIONERS'
6. Dismissing defendants Leverizas' four counterclaims PREDECESSOR-IN-INTEREST AND RESPONDENT MOBIL
against plaintiff; OIL PHILIPPINES, INC. WAS WITHOUT THE CONSENT OF
THE ADMINISTRATOR OF THE CIVIL AERONAUTICS
ADMINISTRATION.
7. Dismissing defendants Leverizas' cross-claim against
defendant CAA;
The petition is devoid of merit.
8. Dismissing defendant CAA's counterclaim against plaintiff;
There is no dispute that Contract "A" at the time of its execution was a
valid contract. The issue therefore is whether or not said contract is still
9. Dismissing defendant CAA's counterclaim against
subsisting after its cancellation by CAA on the ground of a sublease
defendant Leverizas.
executed by petitioners with Mobil Oil Philippines without the consent of
CAA and the execution of another contract of lease between CAA and
No pronouncements as to costs. Mobil Oil Philippines (Contract "C").

On June 2, 1976, defendant Leveriza filed a motion for new trial on the Petitioners contend that Contract "A" is still subsisting because Contract
ground of newly discovered evidence, lack of jurisdiction of the court over "B" is a valid sublease and does not constitute a ground for the
the case and lack of evidentiary support of the decision which was denied cancellation of Contract "A", while Contract "C", a subsequent lease
in the order of November 12,1976 (Rollo, p. 17). agreement between CAA and Mobil Oil Philippines is null and void, for
lack of approval by the Department Secretary. Petitioners anchor their
position on Sections 567 and 568 of the Revised Administrative Code
On July 27, 1976, the CAA filed a Motion for Reconsideration, averring
which require among others, that subject contracts should be executed by
that because the lot lease was properly registered in the name of the
the President of the Philippines or by an officer duly designated by him,
Republic of the Philippines, it was only the President of the Philippines or unless authority to execute the same is by law vested in some other officer
an officer duly designated by him who could execute the lease contract (Petition, Rollo, pp. 15-16).
pursuant to Sec. 567 of the Revised Administrative Code; that the Airport
General Manager has no authority to cancel Contract A, the contract
entered into between the CAA and Leveriza, and that Contract C between At the other extreme, respondent Mobil Oil Philippines asserts that
the CAA and Mobil was void for not having been approved by the Contract "A" was validly cancelled on June 28, 1966 and so was Contract
Secretary of Public Works and Communications. Said motion was "B" which was derived therefrom. Accordingly, it maintains that Contract
however denied on November 12, 1976 (Rollo, p. 18). "C" is the only valid contract insofar as the parcel of land in question is
concerned and that approval of the Department Head is not necessary
under Section 32 (par. 24) of the Republic Act 776 which expressly vested
authority to enter into such contracts in the Administrator of CAA
(Comment; Rollo, p. 83).
On its part, respondent Civil Aeronautics Administration took the middle Director." Under the circumstances, there is no question that such act
ground with its view that Contract "A" is still subsisting as its cancellation enjoys the presumption of regularity, not to mention the unassailable fact
is ineffective without the approval of the Department Head but said that such act was subsequently affirmed or ratified by the Director of the
contract is not enforceable because of petitioners' violation of its terms CAA himself (Record on Appeal, pp. 108-110).
and conditions by entering into Contract "B" of sublease without the
consent of CAA. The CAA further asserts that Contract "C" not having
Petitioners argue that cancelling or setting aside a contract approved by
been approved by the Secretary of Public Works and Communications, is
the Secretary is, in effect, repealing an act of the Secretary which is
not valid (Rollo, p. 43). However, in its comment filed with the Supreme
beyond the authority of the Administrator.
Court, the CAA made a complete turnabout adopting the interpretation and
ruling made by the trial court which was affirmed by the Intermediate
Appellate Court (Court of Appeals), that the CAA Administrator has the Such argument is untenable. The terms and conditions under which such
power to execute the deed or contract of lease involving real properties revocation or cancellation may be made, have already been specifically
under its administration belonging to the Republic of the Philippines provided for in Contract "A" which has already been approved by the
without the approval of the Department Head as clearly provided in Department Head, It is evident that in the implementation of aforesaid
Section 32, paragraph (24) of Republic Act 776. contract, the approval of said Department Head is no longer necessary if
not redundant.
The issue narrows down to whether or not there is a valid ground for the
cancellation of Contract "A." It is further contended that even granting that such cancellation was
effective, a subsequent billing by the Accounting Department of the CAA
has in effect waived or nullified the rescission of Contract "A."
Contract "A" was entered into by CAA as the lessor and the Leverizas as
the lessee specifically "for the purpose of operating and managing a
gasoline station by the latter, to serve vehicles going in and out of the It will be recalled that the questioned cancellation of Contract "A" was
airport." among others, mainly based on the violation of its terms and conditions,
specifically, the sublease of the property by the lessee without the consent
of the lessor.
As regards prior consent of the lessor to the transfer of rights to the leased
premises, the provision of paragraph 7 of said Contract reads in full:
The billing of the petitioners by the Accounting Department of the CAA if
indeed it transpired, after the cancellation of Contract "A" is obviously an
7. The Party of the Second part may transfer her rights to the
error. However, this Court has already ruled that the mistakes of
leased premises but in such eventuality, the consent of the Party
government personnel should not affect public interest. In San Mauricio
of the First Part shall first be secured. In any event, such transfer
Mining Company v. Ancheta (105 SCRA 391, 422), it has been held that
of rights shall have to respect the terms and conditions of this
as a matter of law rooted in the protection of public interest, and also as a
agreement.
general policy to protect the government and the people, errors of
government personnel in the performance of their duties should never
Paragraph 8 provides the sanction for the violation of the above- deprive the people of the right to rectify such error and recover what might
mentioned terms and conditions of the contract. Said paragraph reads: be lost or be bartered away in any actuation, deal or transaction
concerned. In the case at bar, the lower court in its decision which has
been affirmed by the Court of Appeals, ordered the CAA to refund to the
8. Failure on the part of the Party of the Second Part to comply
petitioners the amount of rentals which was not due from them with 6%
with the terms and conditions herein agreed upon shall be
interest per annum until fully paid.
sufficient for revocation of this contract by the Party of the First
Part without need of judicial demand.
Petitioners further assail the interpretation of Contract "A", claiming that
Contract "B" was a mere sublease to respondent Mobil Oil Philippines, Inc.
It is not disputed that the Leverizas (lessees) entered into a contract of
and requires no prior consent of CAA to perfect the same. Citing Article
sublease (Contract "B") with Mobil Oil Philippines without the consent of
1650 of the Civil Code, they assert that the prohibition to sublease must
CAA (lessor). The cancellation of the contract was made in a letter dated
be expressed and cannot be merely implied or inferred (Rollo, p. 151).
June 28, 1966 of Guillermo P. Jurado, Airport General Manager of CAA
addressed to Rosario Leveriza, as follows:
As correctly found by the Court of Appeals, petitioners in asserting the
non- necessity for a prior consent interprets the first sentence of paragraph
(Letterhead)
7 of Contract "A" to refer to an assignment of lease under Article 1649 of
the Civil Code and not to a mere sublease. A careful scrutiny of said
June 28, 1966 paragraph of Contract "A" clearly shows that it speaks of transfer of rights
of Rosario Leveriza to the leased premises and not to assignment of the
lease (Rollo, pp. 48-49).
Mrs. Rosario Leveriza
Manila International Airport
Petitioners likewise argued that it was contemplated by the parties to
Contract "A" that Mobil Oil Philippines would be the owner of the gasoline
Madam:
station it would construct on the leased premises during the period of the
lease, hence, it is understood that it must be given a right to use and
It has been found out by the undersigned that you occupy the lot in question in the form of a sub-lease (Rollo, p. 152).
have sublet the property of the CAA leased to you and
by virtue of this, your lease contract is hereby In Contract "A", it was categorically stated that it is the lessee (petitioner)
cancelled because of the violation of the stipulations who will manage and operate the gasoline station. The fact that Mobil Oil
of the contract. I would like to inform you that even was mentioned in that contract was clearly not intended to give approval
without having sublet the said property the said
to a sublease between petitioners and said company but rather to insure
contract would have been cancelled as per attached that in the arrangements to be made between them, it must be understood
communication. that after the expiration of the lease contract, whatever improvements
have been constructed in the leased premises shall be relinquished to
Respondent Leverizas and the CAA assailed the validity of such CAA. Thus, this Court held that "the primary and elementary rule of
cancellation, claiming that the Airport General Manager had no legal construction of documents is that when the words or language thereof is
authority to make the cancellation. They maintain that it is only the clear and plain or readily understandable by any ordinary reader thereof,
Secretary of Public Works and Communications, acting for the President, there is absolutely no room for interpretation or construction anymore."
or by delegation of power, the Director of Civil Aeronautics Administration (San Mauricio Mining Company v. Ancheta, supra).
who could validly cancel the contract. They do admit, however, and it is
evident from the records that the Airport General Manager signed "For the
Finally, petitioners contend that the administrator of CAA cannot execute Under the above-cited Section 32 (par. 24) of Republic Act 776, the
without approval of the Department Secretary, a valid contract of lease Administrator (Director) of the Civil Aeronautics Administration by reason
over real property owned by the Republic of the Philippines, citing of its creation and existence, administers properties belonging to the
Sections 567 and 568 of the Revised Administrative Code, which provide Republic of the Philippines and it is on these properties that the
as follows: Administrator must exercise his vast power and discharge his duty to enter
into, make and execute contract of any kind with any person, firm, or public
or private corporation or entity and to acquire, hold, purchase, or lease
SEC. 567. Authority of the President of the Philippines to
any personal or real property, right of ways and easements which may be
execute contracts relative to real property. — When the
proper or necessary. The exception, however, is the sale of properties
Republic of the Philippines is party to a deed conveying
acquired by CAA or any other real properties of the same which must have
the title to real property or is party to any lease or other
the approval of the President of the Philippines. The Court of appeals took
contract relating to real property belonging to said
cognizance of the striking absence of such proviso in the other
government, said deed or contract shall be executed on
transactions contemplated in paragraph (24) and is convinced as we are,
behalf of said government by the President of the
that the Director of the Civil Aeronautics Administration does not need the
Philippines or by an officer duly designated by him, unless
prior approval of the President or the Secretary of Public Works and
authority to execute the same is by law expressly vested
Communications in the execution of Contract "C."
in some other officer. (Emphasis supplied)

In this regard, this Court, ruled that another basic principle of statutory
SEC. 568. Authority of national officials to make contract.
construction mandates that general legislation must give way to special
— Written contracts not within the purview of the
legislation on the same subject, and generally be so interpreted as to
preceding section shall, in the absence of special
embrace only cases in which the special provisions are not applicable
provision, be executed, with the approval of the proper
(Sto. Domingo v. De los Angeles, 96 SCRA 139),. that specific statute
Department Head, by the Chief of the Bureau or Office
prevails over a general statute (De Jesus v. People, 120 SCRA 760) and
having control of the appropriation against which the
that where two statutes are of equal theoretical application to a particular
contract would create a charge; or if there is no such chief,
case, the one designed therefor specially should prevail (Wil Wilhensen,
by the proper Department Head himself or the President
Inc. v. Baluyot, 83 SCRA 38)
of the Philippines as the case may require.

WHEREFORE, the petition is DISMISSED for lack of merit and the

On the other hand, respondent CAA avers that the CAA Administrator has
decision of the Court of Appeals appealed from is AFFIRMED in toto.
the authority to lease real property belonging to the Republic of the
Philippines under its administration even without the approval of the
Secretary of Public Works and Communications, which authority is SO ORDERED.
expressly vested in it by law, more particularly Section 32 (24) of Republic
Act 776, which reads:
-------------------------------------------------------------------------------------------------

Sec. 32. Powers and Duties of the Administrator.

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

xxx xxx xxx

(24) To administer, operate, manage, control, maintain

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

There is no dispute that the Revised Administrative Code

is a general law while Republic Act 776 is a special law
nor in the fact that the real property subject of the lease in
Contract "C" is real property belonging to the Republic of
the Philippines.

Under 567 of the Revised Administrative Code, such contract of lease

must be executed: (1) by the President of the Philippines, or (2) by an
officer duly designated by him or (3) by an officer expressly vested by law.
It is readily apparent that in the case at bar, the Civil Aeronautics
Administration has the authority to enter into Contracts of Lease for the
government under the third category. Thus, as correctly ruled by the Court
of Appeals, the Civil Aeronautics Administration has the power to execute
the deed or contract involving leases of real properties belonging to the
Republic of the Philippines, not because it is an entity duly designated by
the President but because the said authority to execute the same is, by
law expressly vested in it.
 • G.R. No. 120319 October 6, 1995 jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the
interpretation or implementation of the CBA and (2) the interpretation or
LUZON DEVELOPMENT BANK, petitioner, enforcement of company personnel policies. Article 262 authorizes them,
vs. but only upon agreement of the parties, to exercise jurisdiction over other
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and labor disputes.
ATTY. ESTER S. GARCIA in her capacity as VOLUNTARY
ARBITRATOR, respondents.
On the other hand, a labor arbiter under Article 217 of the Labor Code has
jurisdiction over the following enumerated cases:
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB)
and the Association of Luzon Development Bank Employees (ALDBE) . . . (a) Except as otherwise provided under this Code
arose an arbitration case to resolve the following issue: the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the
Whether or not the company has violated the
parties for decision without extension, even in the
Collective Bargaining Agreement provision and the
absence of stenographic notes, the following cases
Memorandum of Agreement dated April 1994, on
involving all workers, whether agricultural or non-
promotion.
agricultural:

At a conference, the parties agreed on the submission of their respective

1. Unfair labor practice cases;
Position Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her
capacity as Voluntary Arbitrator, received ALDBE's Position Paper on
January 18, 1995. LDB, on the other hand, failed to submit its Position 2. Termination disputes;
Paper despite a letter from the Voluntary Arbitrator reminding them to do
so. As of May 23, 1995 no Position Paper had been filed by LDB.
3. If accompanied with a claim for reinstatement,
those cases that workers may file involving wages,
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rates of pay, hours of work and other terms and
rendered a decision disposing as follows: conditions of employment;

WHEREFORE, finding is hereby made that the Bank 4. Claims for actual, moral, exemplary and other
has not adhered to the Collective Bargaining forms of damages arising from the employer-
Agreement provision nor the Memorandum of employee relations;
Agreement on promotion.
5. Cases arising from any violation of Article 264 of
Hence, this petition for certiorari and prohibition seeking to set aside the this Code, including questions involving the legality of
decision of the Voluntary Arbitrator and to prohibit her from enforcing the strikes and lockouts;
same.
6. Except claims for Employees Compensation,
In labor law context, arbitration is the reference of a labor dispute to an Social Security, Medicare and maternity benefits, all
impartial third person for determination on the basis of evidence and other claims, arising from employer-employee
arguments presented by such parties who have bound themselves to relations, including those of persons in domestic or
accept the decision of the arbitrator as final and binding. household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
Arbitration may be classified, on the basis of the obligation on which it is
based, as either compulsory or voluntary.
xxx xxx xxx
Compulsory arbitration is a system whereby the parties to a dispute are
compelled by the government to forego their right to strike and are It will thus be noted that the jurisdiction conferred by law on a voluntary
compelled to accept the resolution of their dispute through arbitration by a arbitrator or a panel of such arbitrators is quite limited compared to the
third party.1 The essence of arbitration remains since a resolution of a original jurisdiction of the labor arbiter and the appellate jurisdiction of the
dispute is arrived at by resort to a disinterested third party whose decision National Labor Relations Commission (NLRC) for that matter. 4 The state
is final and binding on the parties, but in compulsory arbitration, such a of our present law relating to voluntary arbitration provides that "(t)he
third party is normally appointed by the government. award or decision of the Voluntary Arbitrator . . . shall be final and
executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties,"5 while the "(d)ecision, awards, or orders
Under voluntary arbitration, on the other hand, referral of a dispute by the
of the Labor Arbiter are final and executory unless appealed to the
parties is made, pursuant to a voluntary arbitration clause in their collective
Commission by any or both parties within ten (10) calendar days from
agreement, to an impartial third person for a final and binding
receipt of such decisions, awards, or orders." 6 Hence, while there is an
resolution.2 Ideally, arbitration awards are supposed to be complied with
express mode of appeal from the decision of a labor arbiter, Republic Act
by both parties without delay, such that once an award has been rendered
No. 6715 is silent with respect to an appeal from the decision of a voluntary
by an arbitrator, nothing is left to be done by both parties but to comply
arbitrator.
with the same. After all, they are presumed to have freely chosen
arbitration as the mode of settlement for that particular dispute. Pursuant
thereto, they have chosen a mutually acceptable arbitrator who shall hear Yet, past practice shows that a decision or award of a voluntary arbitrator
and decide their case. Above all, they have mutually agreed to de bound is, more often than not, elevated to the Supreme Court itself on a petition
by said arbitrator's decision. for certiorari,7 in effect equating the voluntary arbitrator with the NLRC or
the Court of Appeals. In the view of the Court, this is illogical and imposes
an unnecessary burden upon it.
In the Philippine context, the parties to a Collective Bargaining Agreement
(CBA) are required to include therein provisions for a machinery for the
resolution of grievances arising from the interpretation or implementation In Volkschel Labor Union, et al. v. NLRC, et al.,8 on the settled premise
of the CBA or company personnel policies.3 For this purpose, parties to a that the judgments of courts and awards of quasi-judicial agencies must
CBA shall name and designate therein a voluntary arbitrator or a panel of become final at some definite time, this Court ruled that the awards of
arbitrators, or include a procedure for their selection, preferably from those voluntary arbitrators determine the rights of parties; hence, their decisions
accredited by the National Conciliation and Mediation Board (NCMB). have the same legal effect as judgments of a court. In Oceanic Bic Division
Article 261 of the Labor Code accordingly provides for exclusive original (FFW), et al. v. Romero, et al.,9 this Court ruled that "a voluntary arbitrator
by the nature of her functions acts in a quasi-judicial capacity." Under Labor Code and he falls, therefore, within the contemplation of the term
these rulings, it follows that the voluntary arbitrator, whether acting solely "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
or in a panel, enjoys in law the status of a quasi-judicial agency but functions and powers are provided for in the Labor Code does not place
independent of, and apart from, the NLRC since his decisions are not him within the exceptions to said Sec. 9 since he is a quasi-judicial
appealable to the latter.10 instrumentality as contemplated therein. It will be noted that, although the
Employees Compensation Commission is also provided for in the Labor
Code, Circular No. 1-91, which is the forerunner of the present Revised
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902,
Administrative Circular No. 1-95, laid down the procedure for the
provides that the Court of Appeals shall exercise:
appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in
xxx xxx xxx amending Sec. 9 of B.P. 129.

(B) Exclusive appellate jurisdiction over all final A fortiori, the decision or award of the voluntary arbitrator or panel of
judgments, decisions, resolutions, orders or awards arbitrators should likewise be appealable to the Court of Appeals, in line
of Regional Trial Courts and quasi-judicial agencies, with the procedure outlined in Revised Administrative Circular No. 1-95,
instrumentalities, boards or commissions, including just like those of the quasi-judicial agencies, boards and commissions
the Securities and Exchange Commission, the enumerated therein.
Employees Compensation Commission and the Civil
Service Commission, except those falling within the
This would be in furtherance of, and consistent with, the original purpose
appellate jurisdiction of the Supreme Court in
of Circular No. 1-91 to provide a uniform procedure for the appellate
accordance with the Constitution, the Labor Code of
review of adjudications of all quasi-judicial entities18 not expressly
the Philippines under Presidential Decree No. 442, as
excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution
amended, the provisions of this Act, and of
or another statute. Nor will it run counter to the legislative intendment that
subparagraph (1) of the third paragraph and
decisions of the NLRC be reviewable directly by the Supreme Court since,
subparagraph (4) of the fourth paragraph of Section
precisely, the cases within the adjudicative competence of the voluntary
17 of the Judiciary Act of 1948.
arbitrator are excluded from the jurisdiction of the NLRC or the labor
arbiter.
xxx xxx xxx
In the same vein, it is worth mentioning that under Section 22 of Republic
Assuming arguendo that the voluntary arbitrator or the panel of voluntary Act No. 876, also known as the Arbitration Law, arbitration is deemed a
arbitrators may not strictly be considered as a quasi-judicial agency, board special proceeding of which the court specified in the contract or
or commission, still both he and the panel are comprehended within the submission, or if none be specified, the Regional Trial Court for the
concept of a "quasi-judicial instrumentality." It may even be stated that it province or city in which one of the parties resides or is doing business, or
was to meet the very situation presented by the quasi-judicial functions of in which the arbitration is held, shall have jurisdiction. A party to the
the voluntary arbitrators here, as well as the subsequent arbitrator/arbitral controversy may, at any time within one (1) month after an award is made,
tribunal operating under the Construction Industry Arbitration apply to the court having jurisdiction for an order confirming the award and
Commission,11 that the broader term "instrumentalities" was purposely the court must grant such order unless the award is vacated, modified or
included in the above-quoted provision. corrected.19

An "instrumentality" is anything used as a means or agency. 12 Thus, the In effect, this equates the award or decision of the voluntary arbitrator with
terms governmental "agency" or "instrumentality" are synonymous in the that of the regional trial court. Consequently, in a petition for certiorari from
sense that either of them is a means by which a government acts, or by that award or decision, the Court of Appeals must be deemed to have
which a certain government act or function is performed. 13 The word concurrent jurisdiction with the Supreme Court. As a matter of policy, this
"instrumentality," with respect to a state, contemplates an authority to Court shall henceforth remand to the Court of Appeals petitions of this
which the state delegates governmental power for the performance of a nature for proper disposition.
state function.14 An individual person, like an administrator or executor, is
a judicial instrumentality in the settling of an estate,15 in the same manner
ACCORDINGLY, the Court resolved to REFER this case to the Court of
that a sub-agent appointed by a bankruptcy court is an instrumentality of
Appeals.
the court,16and a trustee in bankruptcy of a defunct corporation is an
instrumentality of the state.17
SO ORDERED.
The voluntary arbitrator no less performs a state function pursuant to a
-------------------------------------------------------------------------------------------------
governmental power delegated to him under the provisions therefor in the
 • G.R. No. 102976 October 25, 1995 in Iligan City. The construction of such a steel mill was considered a priority
and major industrial project of the Government. Pursuant to the expansion
IRON AND STEEL AUTHORITY, petitioner, program of the NSC, Proclamation No. 2239 was issued by the President
vs. of the Philippines on 16 November 1982 withdrawing from sale or
THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER settlement a large tract of public land (totalling about 30.25 hectares in
CORPORATION, respondents. area) located in Iligan City, and reserving that land for the use and
immediate occupancy of NSC.
FELICIANO, J.: Since certain portions of the public land subject matter Proclamation No.
2239 were occupied by a non-operational chemical fertilizer plant and
Petitioner Iron and Steel Authority ("ISA") was created by Presidential related facilities owned by private respondent Maria Cristina Fertilizer
Decree (P.D.) No. 272 dated 9 August 1973 in order, generally, to develop Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also dated
and promote the iron and steel industry in the Philippines. The objectives 16 November 1982, was issued directing the NSC to "negotiate with the
of the ISA are spelled out in the following terms: owners of MCFC, for and on behalf of the Government, for the
compensation of MCFC's present occupancy rights on the subject land."
LOI No. 1277 also directed that should NSC and private respondent
Sec. 2. Objectives — The Authority shall have the
MCFC fail to reach an agreement within a period of sixty (60) days from
following objectives:
the date of LOI No. 1277, petitioner ISA was to exercise its power of
eminent domain under P.D. No. 272 and to initiate expropriation
(a) to strengthen the iron and steel industry of the proceedings in respect of occupancy rights of private respondent MCFC
Philippines and to expand the domestic and export relating to the subject public land as well as the plant itself and related
markets for the products of the industry; facilities and to cede the same to the NSC.

(b) to promote the consolidation, integration and

Negotiations between NSC and private respondent MCFC did fail.
rationalization of the industry in order to increase industry
Accordingly, on 18 August 1983, petitioner ISA commenced eminent
capability and viability to service the domestic market and
domain proceedings against private respondent MCFC in the Regional
to compete in international markets;
Trial Court, Branch 1, of Iligan City, praying that it (ISA) be places in
possession of the property involved upon depositing in court the amount
(c) to rationalize the marketing and distribution of steel of P1,760,789.69 representing ten percent (10%) of the declared market
products in order to achieve a balance between demand values of that property. The Philippine National Bank, as mortgagee of the
and supply of iron and steel products for the country and plant facilities and improvements involved in the expropriation
to ensure that industry prices and profits are at levels that proceedings, was also impleaded as party-defendant.
provide a fair balance between the interests of investors,
consumers suppliers, and the public at large;
On 17 September 1983, a writ of possession was issued by the trial court
in favor of ISA. ISA in turn placed NSC in possession and control of the
(d) to promote full utilization of the existing capacity of the land occupied by MCFC's fertilizer plant installation.
industry, to discourage investment in excess capacity,
and in coordination, with appropriate government
The case proceeded to trial. While the trial was ongoing, however, the
agencies to encourage capital investment in priority areas
statutory existence of petitioner ISA expired on 11 August 1988. MCFC
of the industry;
then filed a motion to dismiss, contending that no valid judgment could be
rendered against ISA which had ceased to be a juridical person. Petitioner
(e) to assist the industry in securing adequate and low- ISA filed its opposition to this motion.
cost supplies of raw materials and to reduce the excessive
dependence of the country on imports of iron and steel.
In an Order dated 9 November 1988, the trial court granted MCFC's
motion to dismiss and did dismiss the case. The dismissal was anchored
The list of powers and functions of the ISA included the on the provision of the Rules of Court stating that "only natural or juridical
following: persons or entities authorized by law may be parties in a civil case."3 The
trial court also referred to non-compliance by petitioner ISA with the
requirements of Section 16, Rule 3 of the Rules of Court.4
Sec. 4. Powers and Functions. — The authority shall have
the following powers and functions:
Petitioner ISA moved for reconsideration of the trial court's Order,
contending that despite the expiration of its term, its juridical existence
xxx xxx xxx
continued until the winding up of its affairs could be completed. In the
alternative, petitioner ISA urged that the Republic of the Philippines, being
(j) to initiate expropriation of land required for basic iron the real party-in-interest, should be allowed to be substituted for petitioner
and steel facilities for subsequent resale and/or lease to ISA. In this connection, ISA referred to a letter from the Office of the
the companies involved if it is shown that such use of the President dated 28 September 1988 which especially directed the Solicitor
State's power is necessary to implement the construction General to continue the expropriation case.
of capacity which is needed for the attainment of the
objectives of the Authority;
The trial court denied the motion for reconsideration, stating, among other
things that:
xxx xxx xxx
The property to be expropriated is not for public use or
(Emphasis supplied) benefit [__] but for the use and benefit [__] of NSC, a
government controlled private corporation engaged in
private business and for profit, specially now that the
P.D. No. 272 initially created petitioner ISA for a term of five (5) years government, according to newspaper reports, is offering
counting from 9 August 1973.1 When ISA's original term expired on 10 for sale to the public its [shares of stock] in the National
October 1978, its term was extended for another ten (10) years by Steel Corporation in line with the pronounced policy of the
Executive Order No. 555 dated 31 August 1979. present administration to disengage the government from
its private business ventures.5 (Brackets supplied)
The National Steel Corporation ("NSC") then a wholly owned subsidiary of
the National Development Corporation which is itself an entity wholly Petitioner went on appeal to the Court of Appeals. In a Decision dated 8
owned by the National Government, embarked on an expansion program October 1991, the Court of Appeals affirmed the order of dismissal of the
embracing, among other things, the construction of an integrated steel mill
trial court. The Court of Appeals held that petitioner ISA, "a government xxx xxx xxx
regulatory agency exercising sovereign functions," did not have the same
rights as an ordinary corporation and that the ISA, unlike corporations
(j) to initiate expropriation of land required for basic iron
organized under the Corporation Code, was not entitled to a period for
and steel facilities for subsequent resale and/or lease to
winding up its affairs after expiration of its legally mandated term, with the
the companies involved if it is shown that such use of the
result that upon expiration of its term on 11 August 1987, ISA was
State's power is necessary to implement the construction
"abolished and [had] no more legal authority to perform governmental
of capacity which is needed for the attainment of the
functions." The Court of Appeals went on to say that the action for
objectives of the Authority;
expropriation could not prosper because the basis for the proceedings, the
ISA's exercise of its delegated authority to expropriate, had become
ineffective as a result of the delegate's dissolution, and could not be xxx xxx xxx
continued in the name of Republic of the Philippines, represented by the
Solicitor General:
(Emphasis supplied)

It is our considered opinion that under the law, the

It should also be noted that the enabling statute of ISA expressly
complaint cannot prosper, and therefore, has to be
dismissed without prejudice to the refiling of a new authorized it to enter into certain kinds of contracts "for and in
complaint for expropriation if the Congress sees it fit." behalf of the Government" in the following terms:
(Emphases supplied)
xxx xxx xxx
At the same time, however, the Court of Appeals held that it was
premature for the trial court to have ruled that the expropriation (i) to negotiate, and when necessary, to enter into
suit was not for a public purpose, considering that the parties contracts for and in behalf of the government, for the bulk
had not yet rested their respective cases. purchase of materials, supplies or services for any sectors
in the industry, and to maintain inventories of such
In this Petition for Review, the Solicitor General argues that since ISA materials in order to insure a continuous and adequate
initiated and prosecuted the action for expropriation in its capacity as supply thereof and thereby reduce operating costs of such
sector;
agent of the Republic of the Philippines, the Republic, as principal of ISA,
is entitled to be substituted and to be made a party-plaintiff after the agent
ISA's term had expired. xxx xxx xxx

Private respondent MCFC, upon the other hand, argues that the failure of (Emphasis supplied)
Congress to enact a law further extending the term of ISA after 11 August
1988 evinced a "clear legislative intent to terminate the juridical existence
of ISA," and that the authorization issued by the Office of the President to Clearly, ISA was vested with some of the powers or attributes normally
the Solicitor General for continued prosecution of the expropriation suit associated with juridical personality. There is, however, no provision in
could not prevail over such negative intent. It is also contended that the P.D. No. 272 recognizing ISA as possessing general or comprehensive
exercise of the eminent domain by ISA or the Republic is improper, since juridical personality separate and distinct from that of the Government.
that power would be exercised "not on behalf of the National Government The ISA in fact appears to the Court to be a non-incorporated agency or
but for the benefit of NSC." instrumentality of the Republic of the Philippines, or more precisely of the
Government of the Republic of the Philippines. It is common knowledge
that other agencies or instrumentalities of the Government of the Republic
The principal issue which we must address in this case is whether or not are cast in corporate form, that is to say, are incorporated
the Republic of the Philippines is entitled to be substituted for ISA in view agencies or instrumentalities, sometimes with and at other times without
of the expiration of ISA's term. As will be made clear below, this is really capital stock, and accordingly vested with a juridical personality distinct
the only issue which we must resolve at this time. from the personality of the Republic. Among such incorporated agencies
or instrumentalities are: National Power Corporation;6 Philippine Ports
Rule 3, Section 1 of the Rules of Court specifies who may be parties to a Authority;7 National Housing Authority;8 Philippine National Oil
civil action: Company;9 Philippine National Railways; 10 Public Estates
Authority; 11 Philippine Virginia Tobacco Administration,12 and so forth. It
is worth noting that the term "Authority" has been used to designate both
Sec. 1. Who May Be Parties. — Only natural or juridical incorporated and non-incorporated agencies or instrumentalities of the
persons or entities authorized by law may be parties in a Government.
civil action.
We consider that the ISA is properly regarded as an agent or delegate of
Under the above quoted provision, it will be seen that those who the Republic of the Philippines. The Republic itself is a body corporate and
can be parties to a civil action may be broadly categorized into juridical person vested with the full panoply of powers and attributes which
two (2) groups: are compendiously described as "legal personality." The relevant
definitions are found in the Administrative Code of 1987:
(a) those who are recognized as persons under the law
whether natural, i.e., biological persons, on the one hand, Sec. 2. General Terms Defined. — Unless the specific
or juridical person such as corporations, on the other words of the text, or the context as a whole, or a particular
hand; and statute, require a different meaning:

(b) entities authorized by law to institute actions. (1) Government of the Republic of the Philippines refers
to the corporate governmental entity through which the
functions of government are exercised throughout the
Examination of the statute which created petitioner ISA shows that ISA
Philippines, including, save as the contrary appears from
falls under category (b) above. P.D. No. 272, as already noted, contains
the context, the various arms through which political
express authorization to ISA to commence expropriation proceedings like
authority is made effective in the Philippines, whether
those here involved:
pertaining to the autonomous regions, the provincial, city,
municipal or barangay subdivisions or other forms of local
Sec. 4. Powers and Functions. — The Authority shall have government.
the following powers and functions:
xxx xxx xxx
 (4) Agency of the Government refers to any of the various involved should the condemnation suit be eventually
units of the Government, including a department, successful.
bureau, office, instrumentality, or government-owned or
controlled corporation, or a local government or a distinct
From the foregoing premises, it follows that the Republic of the Philippines
unit therein.
is entitled to be substituted in the expropriation proceedings as party-
plaintiff in lieu of ISA, the statutory term of ISA having expired. Put a little
xxx xxx xxx differently, the expiration of ISA's statutory term did not by itself require or
justify the dismissal of the eminent domain proceedings.
(10) Instrumentality refers to any agency of the National
Government, not integrated within the department It is also relevant to note that the non-joinder of the Republic which
framework, vested with special functions or jurisdiction by occurred upon the expiration of ISA's statutory term, was not a ground for
law, endowed with some if not all corporate powers, dismissal of such proceedings since a party may be dropped or added by
administering special funds, and enjoying operational order of the court, on motion of any party or on the court's own initiative at
autonomy, usually through a charter. This term includes any stage of the action and on such terms as are just. 13 In the instant
regulatory agencies, chartered institutions and case, the Republic has precisely moved to take over the proceedings as
government-owned or controlled corporations. party-plaintiff.

xxx xxx xxx In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate
Court, 14 the Court recognized that the Republic may initiate or participate
in actions involving its agents. There the Republic of the Philippines was
(Emphases supplied)
held to be a proper party to sue for recovery of possession of property
although the "real" or registered owner of the property was the Philippine
When the statutory term of a non-incorporated agency expires, the Ports Authority, a government agency vested with a separate juridical
powers, duties and functions as well as the assets and liabilities of that personality. The Court said:
agency revert back to, and are re-assumed by, the Republic of the
Philippines, in the absence of special provisions of law specifying some
It can be said that in suing for the recovery of the rentals,
other disposition thereof such as, e.g., devolution or transmission of such
the Republic of the Philippines acted as principal of the
powers, duties, functions, etc. to some other identified successor agency
Philippine Ports Authority, directly exercising the
or instrumentality of the Republic of the Philippines. When the expiring
commission it had earlier conferred on the latter as its
agency is an incorporated one, the consequences of such expiry must be
agent. . . .15 (Emphasis supplied)
looked for, in the first instance, in the charter of that agency and, by way
of supplementation, in the provisions of the Corporation Code. Since, in
the instant case, ISA is a non-incorporated agency or instrumentality of In E.B. Marcha, the Court also stressed that to require the
the Republic, its powers, duties, functions, assets and liabilities are Republic to commence all over again another proceeding, as
properly regarded as folded back into the Government of the Republic of the trial court and Court of Appeals had required, was to
the Philippines and hence assumed once again by the Republic, no generate unwarranted delay and create needless repetition of
special statutory provision having been shown to have mandated proceedings:
succession thereto by some other entity or agency of the Republic.
More importantly, as we see it, dismissing the complaint
The procedural implications of the relationship between an agent or on the ground that the Republic of the Philippines is not
delegate of the Republic of the Philippines and the Republic itself are, at the proper party would result in needless delay in the
least in part, spelled out in the Rules of Court. The general rule is, of settlement of this matter and also in derogation of the
course, that an action must be prosecuted and defended in the name of policy against multiplicity of suits. Such a decision would
the real party in interest. (Rule 3, Section 2) Petitioner ISA was, at the require the Philippine Ports Authority to refile the very
commencement of the expropriation proceedings, a real party in interest, same complaint already proved by the Republic of the
having been explicitly authorized by its enabling statute to institute Philippines and bring back as it were to square
expropriation proceedings. The Rules of Court at the same time expressly one.16 (Emphasis supplied)
recognize the role of representative parties:
As noted earlier, the Court of Appeals declined to permit the substitution
Sec. 3. Representative Parties. — A trustee of an of the Republic of the Philippines for the ISA upon the ground that the
expressed trust, a guardian, an executor or administrator, action for expropriation could not prosper because the basis for the
or a party authorized by statute may sue or be sued proceedings, the ISA's exercise of its delegated authority to expropriate,
without joining the party for whose benefit the action is had become legally ineffective by reason of the expiration of the statutory
presented or defended; but the court may, at any stage of term of the agent or delegated i.e., ISA. Since, as we have held above,
the proceedings, order such beneficiary to be made a the powers and functions of ISA have reverted to the Republic of the
party. . . . . (Emphasis supplied) Philippines upon the termination of the statutory term of ISA, the question
should be addressed whether fresh legislative authority is necessary
before the Republic of the Philippines may continue the expropriation
In the instant case, ISA instituted the expropriation proceedings in its
proceedings initiated by its own delegate or agent.
capacity as an agent or delegate or representative of the Republic of the
Philippines pursuant to its authority under P.D. No. 272. The present
expropriation suit was brought on behalf of and for the benefit of the While the power of eminent domain is, in principle, vested primarily in the
Republic as the principal of ISA. Paragraph 7 of the complaint stated: legislative department of the government, we believe and so hold that no
new legislative act is necessary should the Republic decide, upon being
substituted for ISA, in fact to continue to prosecute the expropriation
7. The Government, thru the plaintiff ISA, urgently needs
proceedings. For the legislative authority, a long time ago, enacted a
the subject parcels of land for the construction and
continuing or standing delegation of authority to the President of the
installation of iron and steel manufacturing facilities that
Philippines to exercise, or cause the exercise of, the power of eminent
are indispensable to the integration of the iron and steel
domain on behalf of the Government of the Republic of the Philippines.
making industry which is vital to the promotion of public
The 1917 Revised Administrative Code, which was in effect at the time of
interest and welfare. (Emphasis supplied)
the commencement of the present expropriation proceedings before the
Iligan Regional Trial Court, provided that:
The principal or the real party in interest is thus the Republic of
the Philippines and not the National Steel Corporation, even
Sec. 64. Particular powers and duties of the President of
though the latter may be an ultimate user of the properties
the Philippines. — In addition to his general supervisory
authority, the President of the Philippines shall have such
 other specific powers and duties as are expressly It is argued by private respondent MCFC that, because Congress after
conferred or imposed on him by law, and also, in becoming once more the depository of primary legislative power, had not
particular, the powers and duties set forth in this Chapter. enacted a statute extending the term of ISA, such non-enactment must be
deemed a manifestation of a legislative design to discontinue or abort the
present expropriation suit. We find this argument much too speculative; it
Among such special powers and duties shall be:
rests too much upon simple silence on the part of Congress and casually
disregards the existence of Section 12 of the 1987 Administrative Code
xxx xxx xxx already quoted above.

(h) To determine when it is necessary or advantageous to Other contentions are made by private respondent MCFC, such as, that
exercise the right of eminent domain in behalf of the the constitutional requirement of "public use" or "public purpose" is not
Government of the Philippines; and to direct the Secretary present in the instant case, and that the indispensable element of just
of Justice, where such act is deemed advisable, to cause compensation is also absent. We agree with the Court of Appeals in this
the condemnation proceedings to be begun in the court connection that these contentions, which were adopted and set out by the
having proper jurisdiction. (Emphasis supplied) Regional Trial Court in its order of dismissal, are premature and are
appropriately addressed in the proceedings before the trial court. Those
proceedings have yet to produce a decision on the merits, since trial was
The Revised Administrative Code of 1987 currently in force has still on going at the time the Regional Trial Court precipitously dismissed
substantially reproduced the foregoing provision in the following
the expropriation proceedings. Moreover, as a pragmatic matter, the
terms: Republic is, by such substitution as party-plaintiff, accorded an opportunity
to determine whether or not, or to what extent, the proceedings should be
Sec. 12. Power of eminent domain. — The President continued in view of all the subsequent developments in the iron and steel
shall determine when it is necessary or advantageous to sector of the country including, though not limited to, the partial
exercise the power of eminent domain in behalf of the privatization of the NSC.
National Government, and direct the Solicitor General,
whenever he deems the action advisable, to institute WHEREFORE, for all the foregoing, the Decision of the Court of Appeals
expopriation proceedings in the proper court. (Emphasis dated 8 October 1991 to the extent that it affirmed the trial court's order
supplied)
dismissing the expropriation proceedings, is hereby REVERSED and SET
ASIDE and the case is REMANDED to the court a quo which shall allow
In the present case, the President, exercising the power duly the substitution of the Republic of the Philippines for petitioner Iron and
delegated under both the 1917 and 1987 Revised Steel Authority and for further proceedings consistent with this Decision.
Administrative Codes in effect made a determination that it was No pronouncement as to costs.
necessary and advantageous to exercise the power of eminent
domain in behalf of the Government of the Republic and SO ORDERED.
accordingly directed the Solicitor General to proceed with the
suit. 17 -------------------------------------------------------------------------------------------------
 • G.R. No. 145972 March 23, 2004 the issuance of ECC from the DENR-Region IV, on February 3,
1994.
IGNACIA BALICAS, petitioner,
vs.
On March 12, 1994, an Inspection Report allegedly prepared by
FACT-FINDING & INTELLIGENCE BUREAU (FFIB), OFFICE OF THE
respondent BALICAS, attested by respondent RUTAQUIO and
OMBUDSMAN, respondents.
approved by respondent TOLENTINO re: field evaluation to the
issuance of ECC, was submitted.
DECISION
QUISUMBING, J.:
Consequently, on April 28, 1994, upon recommendations of
respondent TOLENTINO, Philjas’ application for ECC was
This petition for review on certiorari assails the Court of Appeals’
approved by respondent PRINCIPE, then Regional Executive
decision1 dated August 25, 2000 and resolution2 of November 13, 2000 in
Director, DENR under ECC-137-R1-212-94.
CA-G.R. SP No. 56386, which affirmed the Ombudsman’s
decision3 dismissing petitioner from government service for gross neglect
of duty in connection with the tragedy at the Cherry Hills Subdivision in A Mining Field Report for SSMP dated May 10, 1994 was
Antipolo City on August 3, 1999. submitted pursuant to the inspection report prepared by
respondents CAYETANO, FELICIANO, HILADO and
BURGOS, based on their inspection conducted on April 25 to
The antecedent facts as summarized in the Ombudsman’s decision are
29, 1994. The report recommended, among others, that the
as follows:
proposed extraction of materials would pose no adverse effect
to the environment.
Based on the evidence adduced by the complainant, the
following is the chronological series of events which led to the
Records further disclosed that on August 10, 1994, respondent
development of the CHS (Cherry Hills Subdivision):
BALICAS monitored the implementation of the CHS Project
Development to check compliance with the terms and
August 28, 1990 – Philjas Corporation, whose primary conditions in the ECC. Again, on August 23, 1995, she
purposes, among others are: to own, develop, subdivide, conducted another monitoring on the project for the same
market and provide low-cost housing for the poor, was purpose. In both instances, she noted that the project was still
registered with the Securities and Exchange Commission in the construction stage hence, compliance with the stipulated
(SEC). conditions could not be fully assessed, and therefore, a follow-
up monitoring is proper. It appeared from the records that this
August 23, 1995 monitoring inspection was the last one
February 19, 1991 – then City Mayor Daniel S. Garcia, conducted by the DENR.
endorsed to the Housing and Land Use Regulatory Board
(HLURB) the proposed CHS.
On September 24, 1994, GOV. CASIMIRO I. YNARES, JR.,
approved the SSMP applied for by Philjas under SSMP No.
Thereafter, or on 07 March 1991, based on the favorable RZL-012, allowing Philjas to extract and remove 50,000 metric
recommendations of Mayor Garcia, respondent TAN, issued the tons of filling materials from the area for a period of two (2) years
Preliminary Approval and Locational Clearance (PALC) for the from date of its issue until September 6, 1996.4
development of CHS.

Immediately after the tragic incident on August 3, 1999, a fact-finding

On July 5, 1991, then HLURB Commissioner respondent investigation was conducted by the Office of the Ombudsman through its
TUNGPALAN issued Development Permit No. 91-0216 for Fact-Finding and Intelligence Bureau (FFIB), which duly filed an
"land development only" for the entire land area of 12.1034 administrative complaint with the Office of the Ombudsman against
hectares covered by TCT No. 35083 (now TCT 208837) and several officials of the Housing and Land Use Regulatory Board (HLURB),
with 1,003 saleable lots/units with project classification B.P. 220 Department of Environment and Natural Resources (DENR), and the local
Model A-Socialized Housing (p. 96, Records), with several government of Antipolo.
conditions for its development.

The charge against petitioner involved a supposed failure on her part to

Three (3) days thereafter or on July 8, 1991, respondent monitor and inspect the development of Cherry Hills Subdivision, which
JASARENO, allowed/granted the leveling/earth-moving was assumed to be her duty as DENR senior environmental management
operations of the development project of the area subject to specialist assigned in the province of Rizal.
certain conditions.

For her part, petitioner belied allegations that monitoring was not
On November 18, 1991, then HLURB Commissioner AMADO conducted, claiming that she monitored the development of Cherry Hills
B. DELORIA issued Certificate of Registration No. 91-11-0576 Subdivision as evidenced by three (3) monitoring reports dated March 12,
in favor of CHS, with License to Sell No. 91-11-0592 for the 1994, August 10, 1994 and August 23, 1995. She averred that she also
1,007 lots/units in the subdivision. conducted subsequent compliance monitoring of the terms and conditions
of Philjas’ Environmental Compliance Certificate (ECC) on May 19, 1997
Eventually, on December 10, 1991, respondent POLLISCO and noted no violation thereon. She further claimed good faith and
issued Small Scale Mining Permit (SSMP) No. IV-316 to Philjas exercise of due diligence, insisting that the tragedy was a fortuitous event.
to extract and remove 10,000 cu. meters of filling materials from She reasoned that the collapse did not occur in Cherry Hills, but in the
the area where the CHS is located. adjacent mountain eastern side of the subdivision.

Thereafter, or on January 12, 1994, Philjas applied for a Small On November 15, 1999, the Office of the Ombudsman rendered a decision
Scale Mining Permit (SSMP) under P.D. 1899 with the Rizal imposing upon petitioner the supreme penalty of dismissal from office for
Provincial Government to extract and remove 50,000 metric gross neglect of duty finding:
tons of filling materials per annum on CHS’ 2.8 hectares.
RESPONDENT BALICAS
Thus, on January 17, 1994, respondent MAGNO, informed
ELIEZER I. RODRIGUEZ of Philjas that CHS is within the EIS Records show that she monitored and inspected the CHS
System and as such must secure ECC from the DENR. Philjas [Cherry Hills Subdivision] only thrice (3), to wit:
was accordingly informed of the matter such that it applied for
 1. Inspection Report dated 12 March 1994 3. Conducts follow-up inspection of construction of pollution
abatement/work and structures to oversee compliance with
approved plans and specifications;
2. Monitoring Report dated 10 August 1994

4. Recommends remedial measures for the prevention,

3. Monitoring Report dated 23 August 1995
abatement and control of pollution;

Verily, with this scant frequency, how can respondent Balicas

5. Prepares technical reports on pollution investigation and
sweepingly claim that there was no violation of ECC compliance
related activities; and
and that she had done what is necessary in accordance with the
regular performance of her duties. She herself recognized the
fact that the "collapsed area is not the subdivision in question 6. Performs related work as assigned.
but the adjacent mountain eastern side of the CHS." It is
incumbent upon her to establish the same in her monitoring and
It is readily apparent that no monitoring duty whatsoever is mentioned in
inspection reports and make objective recommendations re: its
the said letter. The PENRO, on the other hand, is mandated to:
possible adverse effect to the environment and to the residents
of the CHS and nearby areas. Her defense that the position of
the CHS shows the impossibility of checking the would-be 1. conduct surveillance and inspection of pollution sources and
adverse effect clearly established her incompetence. No expert control facilities and undertake/initiate measures relative to
mind is needed to know that mountains cause landslide and pollution-related complaints of the general public for appropriate
erosion. Cherry Hills Subdivision is a living witness to this. 5 referral to the regional office;

Petitioner seasonably filed a petition for review of the Ombudsman’s 2. comment on the project description, determine if the project
decision with the Court of Appeals. In its decision dated August 25, 2000, fall within the Environmental Impact Statement (EIS)
the Court of Appeals dismissed the petition for lack of merit and affirmed System8 and submit the same to the regional office; and
the appealed decision. It found that the landslide was a preventable
occurrence and that petitioner was guilty of gross negligence in failing to
3. implement programs and projects related to environmental
closely monitor Philjas’ compliance with the conditions of the ECC given
management within the PENRO.9
the known inherent instability of the ground where the subdivision was
developed. The appellate court likewise denied petitioner’s motion for
reconsideration in its resolution dated November 13, 2000. In addition, the PENRO is likewise tasked to monitor the project
proponent’s compliance with the conditions stipulated in the ECC, with
Petitioner now comes to this Court for review on certiorari, under Rule 45 support from the DENR regional office and the Environmental
of the Rules of Civil Procedure, of the appellate court’s decision. She Management Bureau.10The primary purpose of compliance monitoring is
to ensure the judicious implementation of sound and standard
alleges that the Court of Appeals committed serious errors of law in
affirming the Ombudsman’s conclusion that: environmental quality during the development stage of a particular project.
Specifically, it aims to:

1 There was gross negligence on the part of petitioner Balicas

in the performance of her official duties as Senior Environmental 1. monitor project compliance with the conditions set in the
Management Specialist (SEMS) of the Provincial Environment ECC;
and Natural Resources Office (PENRO) Province of Rizal,
DENR Region IV; and the alleged gross neglect of duty of 2. monitor compliance with the Environmental Management
petitioner warranted the imposition of the extreme penalty of Plan (EMP) and applicable laws, rules and regulations; and
dismissal from the service.
3. provide a basis for timely decision-making and effective
2. The landslide which caused the death of several residents of planning and management of environmental measures through
the subdivision and the destruction of property is not a fortuitous the monitoring of actual project impacts vis-à-vis predicted
event and therefore preventible.6 impacts in the EIS.11

The main issues are whether or not the Court of Appeals committed Based on the foregoing, the monitoring duties of the PENRO mainly deal
serious errors of law in: (1) holding petitioner guilty of gross neglect of duty with broad environmental concerns, particularly pollution abatement. This
and (2) imposing upon her the extreme penalty of dismissal from office. general monitoring duty is applicable to all types of physical developments
that may adversely impact on the environment, whether housing projects,
In order to ascertain if there had been gross neglect of duty, we have to industrial sites, recreational facilities, or scientific undertakings.
look at the lawfully prescribed duties of petitioner. Unfortunately, DENR
regulations are silent on the specific duties of a senior environmental However, a more specific monitoring duty is imposed on the HLURB as
management specialist. Internal regulations merely speak of the functions the sole regulatory body for housing and land development. It is mandated
of the Provincial Environment and Natural Resources Office (PENRO) to to encourage greater private sector participation in low-cost housing
which petitioner directly reports. through (1) liberalization of development standards, (2) simplification of
regulations and (3) decentralization of approvals for permits and
Nonetheless, petitioner relies on a letter7 dated December 13, 1999 from licenses.12
the chief of personnel, DENR Region IV, which defines the duties of a
senior environmental management specialist as follows: P.D. No. 158613 prescribes the following duties on the HLURB (then
Ministry of Human Settlements) in connection with environmentally critical
1. Conducts investigation of pollution sources or complaints; projects requiring an ECC:

SECTION 4. Presidential Proclamation of Environmentally

2. Review[s] plans and specifications of proposes (sic) or
Critical Areas and Projects. – The President of the Philippines
existing treatment plants and pollution abatement structures
and devices to determine their efficiency and suitability for the may, on his own initiative or upon recommendation of the
kind of pollutants to be removed and to recommend issuance or National Environment Protection Council, by proclamation
declare certain projects, undertakings or areas in the country as
denial of permits;
environmentally critical. No person, partnership or corporation
shall undertake or operate any such declared environmentally
critical project or area without first securing an Environmental
 Compliance Certificate issued by the President or his duly DENR Region IV who approved Philjas’ application for ECC, not liable for
authorized representative. For the proper management of said gross neglect of duty. The Court reversed the decision of the Court of
critical project or area, the President may by his proclamation Appeals and thereby annulled the decision of the Ombudsman in OMB-
reorganize such government offices, agencies, institutions, ADM-09-661, dated December 1, 1999, dismissing Principe from the
corporations or instrumentalities including the re-alignment of government service. We ordered his reinstatement with back pay and
government personnel, and their specific functions and without loss of seniority.15
responsibilities.
The rationale for our decision in Principe bears reiteration: the
For the same purpose as above, the Ministry of Human responsibility of monitoring housing and land development projects is not
Settlements [now HLURB] shall: (a) prepare the proper land lodged with the DENR, but with the HLURB as the sole regulatory body
or water use pattern for said critical project(s) or area(s); for housing and land development. Thus, we must stress that we find no
(b) establish ambient environmental quality standards; (c) legal basis to hold petitioner, who is an officer of DENR, liable for gross
develop a program of environmental enhancement or neglect of the duty pertaining to another agency, the HLURB. It was grave
protective measures against calamitous factors such as error for the appellate court to sustain the Ombudsman’s ruling that she
earthquake, floods, water erosion and others; and (d) should be dismissed from the service. The reinstatement of petitioner is
perform such other functions as may be directed by the clearly called for.
President from time to time. (Emphasis ours.)
WHEREFORE, the petition is hereby GRANTED. The Court of Appeals’
The legal duty to monitor housing projects, like the Cherry Hills decision affirming the Ombudsman’s dismissal of petitioner IGNACIA
Subdivision, against calamities such as landslides due to continuous rain, BALICAS from office is REVERSED and SET ASIDE, and petitioner’s
is clearly placed on the HLURB, not on the petitioner as PENRO senior REINSTATEMENT to her position with back pay and without loss of
environmental management specialist. In fact, the law imposes no clear seniority rights is hereby ordered.
and direct duty on petitioner to perform such narrowly defined monitoring
function.
SO ORDERED.

In the related case of Principe v. Fact-Finding and Intelligence -------------------------------------------------------------------------------------------------

Bureau,14 this Court found Antonio Principe, regional executive director for
 • G.R. No. 183260 July 4, 2012 The Complaint was later on amended to include Buhain, in his capacity as
Chairman of PSC, and the chairman and members of the Bids and Awards
PHILIPPINE SPORTS COMMISSION, CESAR PRADAS, NOEL Committee (BAC), namely, Cesar Pradas, Eugene De Vera, Noel Elnar,
ELNAR, EMERENCIANA SAMSON, CESAR ABALON, JULIA Emerenciana Samson, Cesar Abalon, Julia Llanto, and Edgardo Mateo.17
LLANTO, EDGARDO MATEO AND ERIC BUHAIN, Petitioners,
vs.
After the trial on the merits, the RTC dismissed the complaint, in its
DEAR JOHN SERVICES, INC., Respondent.
November 29, 2006 Decision, for lack of merit. It upheld the authority of
the PSC to award the service contract to CBMI because the latter’s bid
DECISION
was advantageous to the government.
MENDOZA, J.:

On appeal, the CA, in the subject decision, reversed and set aside the
Before the Court is a petition for review under Rule 45 of the Rules of
RTC decision, as it disposed:
Court seeking the reversal of the April 17, 2008 Decision1 and the June
11, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No.
88606, which reversed and set aside the November 29, 2006 Decision3 of WHEREFORE, premises considered, the present appeal is hereby
the Regional Trial Court, Branch 196, Parañaque City (RTC), in Civil Case GRANTED. The appealed Decision dated November 29, 2006 of the
No. 02-0212, entitled "Dear John Services, Inc. v. Philippine Sports Regional Trial Court of Parañaque City, Branch 196 in Civil Case No. 02-
Commission." 0212 is hereby REVERSED and SET ASIDE. A new judgment is hereby
entered ordering the individual defendants-appellees, jointly and
severally, to pay plaintiff-appellant the sum of Two Hundred Thousand
The Facts:
Pesos (₱ 200,000.00) as nominal damages.

In December 2001, respondent Philippine Sports

Needless to reiterate, the Amended Complaint as against defendant-
Commission (PSC) published an "Invitation to Bid" for its janitorial and
appellee Philippine Sports Commission is dismissed.
security services. Pursuant thereto, respondent Dear John Services,
Inc. (Dear John Services) submitted its letter4 signifying its intent to
participate in the bidding and subsequently paid the bidding fee.5 No pronouncement as to costs.

On March 8, 2002, PSC Chairman Eric Buhain (Buhain), in a SO ORDERED.18

memorandum,6 cancelled the pre-bidding conference pending evaluation
of all procedures and documents relative to the bidding policies.
In coming up with the said decision, the CA explained:

When the review was completed, the "Invitation to Apply for Eligibility and
xxx
to Bid" was re-advertised in order to comply with the requirements set forth
in Executive Order (E.O.) No. 40, Series of 2001 and in its Implementing
Rules and Regulations.7 The pre-bidding and bidding dates were then The controversy revolved around the so-called "Agency Approved
scheduled to April 16, 2002 and April 26, 2002, respectively. Estimate" which is nowhere found or mentioned in EO 40 or its IRR. What
EO 40 mandates is the use of the lowest calculated and responsive bid
intended to be transparent, objective and non-discretionary criteria, and
Among the bidders who qualified and submitted the necessary documents
the approved budget contract (ABC) as the ceiling of the bid price. It is
for prequalification were Dear John Services 8 and Consolidated Building
significant to note that appellees are mandated to disclose the "approved
Maintenance, Inc.9 (CBMI). A procedure for the conduct of the public
budget for the contract" in the Invitation to Bid pursuant to Sec. 14 of EO
bidding, entitled "Instruction to Bidders,"10 was given to the qualified
40, another feature of the law aimed at ensuring transparency and
bidders.
objectivity in the bidding process. Records do not show compliance with
said requirement. While Sec. 27, bids tendered must be post-qualified to
The bidding was held as scheduled and the sealed bids were opened. determine if they satisfied all the conditions and requirements in the
Dear John Services’ bid amounted to ₱ 18,560,078.00 while that of CBMI bidding documents, specifically the condition imposed in the Instructions
amounted to ₱ 27,419,097.00. PSC, however, awarded the contract to to Bidders that the bid amount should not be lower that 60% of the "AAE",
CBMI because Dear John Services allegedly failed to reach the 60% lower this lower limit violates the rule laid down in EO 40 which prohibits such
limit of the Approved Agency Estimate (AAE).11 lower limit to the contract amount. Sec. 25 of the IRR reiterated the rule
that "there shall be no lower limit to or floor on the amount of the award."
Dear John Services sent a letter,12 dated May 8, 2002, to Buhain
requesting that its bid be reconsidered and stating therein that the AAE Moreover, the non-disclosure of the AAE prior to the bidding contravenes
amounting to ₱ 32,554,050.00 should have been disclosed prior to the the policy of transparency, on the assumption that such AAE is equivalent
bidding and that its revelation after the opening of the bid was highly to ABC since the latter amount is required to be disclosed in the Invitation
irregular. to Bid. Neither can the AAE be equated with the "Lowest Calculated and
Responsive Bid" considering the admission in the testimony of BAC
Chairman Cesar Pradas that the AAE was determined even prior to the
Subsequently, Dear John Services filed a Complaint13 against PSC for
bidding held on April 26, 2002, or more precisely as early as April 18, 2002.
injunction before the RTC praying, among others, that a temporary
The imposition of the 60% below AAE ceiling for the bids therefore has no
restraining order (TRO) be issued enjoining PSC and its
legal basis and contrary to the prohibition against a floor price for the
officers (petitioners) from awarding the janitorial services to CBMI; that a
amount of the award under EO 40.
preliminary injunction be issued restraining PSC from availing of CBMI’s
janitorial services; and that after the hearing, the injunction be made
permanent. 4.2 Award of Contract

On May 14, 2002, the RTC issued a TRO, enjoining PSC from awarding Award of Contract will be made in accordance with the provisions of EO
its janitorial services to CBMI and/or allowing the latter to perform its 40 and its implementing Rules and Regulations (IRR). The PSC, however,
contract in the event that it had been awarded. 14 The said TRO was is not bound to accept the lowest bid or any bid nor will be responsible for
extended until May 20, 2002.15 or pay any expenses which maybe incurred by any Bidder in the
preparation or submission of its Bid. The PBAC-BAC also reserves the
right to award the contract to the bidder whose Bid is evaluated to be the
Thereafter, the prayer for the extension of the TRO and the request for the
most advantageous to the government.
issuance of the writ of preliminary mandatory injunction were denied in the
RTC Order,16 dated May 20, 2002.
No award of contract shall be made to a Bidder whose bid price is higher
than the allowable government estimate (AGE) or the Approved Agency
Estimate (AAE) whichever is higher, or lower than seventy percent (70%) is shown. Accordingly, a bidder has no ground of action to compel the
of the AGE, for the purpose of these implementing rules and regulations, Government to award the contract in his favor, nor compel it to accept his
the AGE shall be equal to one-half (1.5) of all responsive bids. For purpose bid. Even the lowest bid or any bid may be rejected.
of determining the average of all responsible bids, bids higher than One
Hundred Twenty Percent (120%) of the AAE or lower than sixty percent
Generally, the discretion to accept or repea[l] a bid and award contract is
(60%) of the AAE shall not be considered.
of such wide latitude that the Court will not interfere therewith, unless it is
apparent that it is used as a shield to a fraudulent award. The exercise of
Upon careful and thorough evaluation of Bids, the winning Bidder shall be the discretion is a policy decision vested in the government agencies
informed through written Notice of Award. entrusted with that function. The exercise of that discretion is a policy
decision that necessitates prior inquiry, investigation, comparison,
evaluation, and deliberation. This task can best be discharged by the
The PSC is not bound to justify the selection of the successful Bidder to
concerned government agencies, not by the courts. The role of the courts
any Bidder or other interested party.
is to ascertain whether a branch or instrumentality of the government has
transgressed its constitutional boundaries. Courts will not interfere with
The above conditions in the Instruction to Bidders does not comply with executive or legislative discretion exercised within those boundaries.
the requirements of EO 40 and its IRR, and are offensive to due process
as they contravene the principles of transparency, objectivity and non-
This policy has been reiterated in a more recent case, thus:
discretionary criteria established therein. The fact that appellant voluntarily
accepted these conditions and submitted its bid without any question
regarding the existence of or amount of the AAE is of no moment, in view Further, LWUA made a reservation to reject bids as the Invitation to
of the irregular bidding procedure. Appellees had not been transparent Prequalify and Bid published in the June 6, 1992 issue of the Philippine
and objective about the so-called AAE as to whether it represents the Daily Inquirer shows:
approved budget contract or the lower calculated and responsive bid
provided in EO 40. Thus, although it is conceded that there is no evidence
LWUA reserves the right to reject any or all the bids, to waive any formality
of collusion or that the conditions imposed by appellees were made the
found therein and to accept such bid or a part thereof as may be deemed
basis of a fraudulent award, it cannot be gainsaid that the bidding
most advantageous to LWUA. (Empahsis and underscoring supplied)
instructions were arbitrarily issued and the entire bidding procedure did
not comply with EO 40 and its IRR.
The discourse in his "A TREATISE ON GOVERNMENT CONTRACT
UNDER PHILIPPINE LAW" of former Commissioner of the Commission
Appellees’ reliance on the following reservation clause in the Instruction
on Audit Bartolome C. Fernandez, Jr. is enlightening:
to Bidders, likewise holds no water.

It is a settled rule that where the invitation to bid contains a reservation for
1.4 Rejection of Bids, Disqualification of Bidder and other sanctions
the Government to reject any or all bids, the lowest or highest bidder, as
the case may be, is not entitled to an award as a matter of right for it does
The office of the PSC reserves the right to reject any or all bids and waives not become the ministerial duty of the Government to make such award.
any required formality in the bids received. The right is also reserved to Thus, it has been held that where the right to reject is so reserved, the
reject the bid of any bidder (a) that is above AAE or AGE (b) who had lowest bid or any bid for that matter may be rejected on a mere technicality,
previously failed to satisfactorily perform or complete any contract services that all bids may be rejected, even if arbitrarily and unwise, or under a
undertaken by him/her or was eligible on the basis of suppressed or false mistake, and that in the exercise of a sound discretion, the award may be
information. made to another than the lowest bidder. And so, where the Government
as advertiser, availing itself of that right, makes its choice in rejecting any
or all bids, the losing bidder has no cause to complain nor right to dispute
The PSC assumes no obligation whatsoever to compensate or indemnify
that choice, unless an unfairness or injustice is shown. Accordingly, he
bidders for any expenses or loss that may be incurred in the preparation
has no ground of action to compel the Government to award the contract
of the bids nor does it guarantee that an award will be made.
in his favor, nor to compel it to accept his bid.

The PSC will reject any non-complying Bid, i.e., a Bid that fails to meet
Verily, a reservation in the advertisement for bids of the right to reject any
any requirement, terms or condition set forth in the Tender Documents as
bid generally vests in the authorities a wide discretion as to who is the best
well as relevant laws, rules and regulations.
and most advantageous bidder. The exercise of such discretion involves
inquiry, investigation, comparison, deliberation and decision, which are
Notwithstanding the eligibility of any contractor to submit Bids for the quasi-judicial functions, and when honestly performed, may not be
proposed contract, PSC reserves the right to review its Eligibility reviewed by the courts. In such cases, there is no binding obligation to
requirements, statements and other relevant information before and/or award the contract to any bidder and in the exercise of such discretion the
after the submission and before award of the Contract. Should such review award may be made validly to whoever among the participating bidders
uncover any misrepresentation made in the Eligibility statement, the BAC has submitted the most advantageous bid.
shall disqualify the contractor from submitting a Bid or shall not make any
award to prospective Contracting Agencies.
Contrary then to the assertion of petitioner, the bidding was carried out in
accordance with its purpose of protecting public interest by giving the
Under Sec. 29 of EO 40, such reservation clause is essential. public the best possible advantages through open competition.

Sec. 29. Reservation Clause. The government reserves the right to reject However, a reading of the decisional rule on reservation of right to reject
any all bids, or declare a failure of bidding, or not award the contract for cautions against injustice, unfairness, arbitrariness, fraudulent acts or
any justifiable reason including among others, if there is evidence of grave abuse of discretion. A contrary conclusion would be anathema to
collusion between relevant public officers or employees of the agency or the purposes for which public biddings are founded – to give the public the
the BAC and any of the which restricts, suppresses or nullifies competition, best possible advantages through open competition – as it would give the
or if the BAC is found to have failed to follow the prescribed bidding unscrupulous a plain escape to rig the bidding process. Grave abuse of
procedures. discretion is committed when an act is: 1) done contrary to the
Constitution, the law or jurisprudence, or 2) executed whimsically or
arbitrarily in a manner so patent and so gross as to amount to an evasion
The Supreme Court has ruled in National Power Corporation vs. Philipp
of a positive duty, or to a virtual refusal to perform the duty enjoined. The
Brothers Oceanic, Inc. where the right to reject is so reserved, the lowest
bidding conducted by the appellees is clearly tainted with irregularity and
bid or any bid for that matter may be rejected on a mere technicality. And grave abuse, resulting in prejudice and material loss to appellant.19
where the government as advertiser, availing itself of that right, makes its
choice in rejecting any or all bids, the losing bidder has no cause to
complain nor right to dispute that choice unless an unfairness or injustice x x x.
Petitioners filed their motion for reconsideration but was denied in the June In the case at bench, PSC-BAC failed to comply with the requirements and
11, 2008 CA Resolution. Hence, this petition, anchored on the following: procedures for competitive bidding specified under E.O. No. 40.

GROUNDS RELIED UPON IN THE PETITION Section 14 of E.O. No. 40 provides:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN Section 14. Invitation to Bid. The invitation to bid shall contain, among
REVERSING THE JUDGMENT OF THE LOWER COURT others: a brief description of the items to be procured; the eligibility
CONSIDERING THAT: requirements; the place, date and time of the deadlines for receipt of
eligibility requirements and bids; the approved budget for the contract to
be bid; time and place of the opening of bids; and the contract duration or
I
delivery. [Underlining supplied]

RESPONDENT FAILED TO REACH THE 60% LOWER LIMIT OF THE

Section 14 of the Implementing Rules and Regulations (IRR) of E.O. No.
AAE.
40 specifically mandates the BAC to include in the "Invitation to Apply for
Eligibility and to Bid" the following information to guide the prospective
II bidders, to wit:

PETITIONER PSC HAD BASIS TO REJECT RESPONDENT’S BID Section 14. Invitation to Bid
BECAUSE OF THE RESERVATION CLAUSE IN THE INSTRUCTION TO
BIDDERS.20
14.1. Contents of the Invitation to Apply for Eligibility and to Bid

Petitioners point out that the "Instruction to Bidders" clearly provides that
xxxx
the bid price should not be less than 60% of the AAE. When Dear John
Services submitted its bid, it expressed its assent in the "Instruction to
Bidders" and so it was bound by the terms and conditions stated therein. 1. The name, address, telephone number, facsimile number, e-
mail and website addresses of the concerned agency, as well
as its designated contact person;
They explain that the condition that the bid amount should not be lower
than 60% of the AAE is necessary in order to ensure compliance with the
minimum wage, 13th month pay, state insurance and other benefits 2. For the procurement of:
imposed by statutes, and to guarantee efficient and effective performance
by the winning bidder.
a) Goods, the name of the contract to be bid and a
brief description of the goods to be procured;
Petitioners further aver that there is nothing in E.O. No. 40 that mandates
the disclosure of the AAE to bidders. Besides, Dear John Services never
b) Civil works, the name and location of the contract
demanded its disclosure during the opening of the bids.
to be bid, the project background and other relevant
information regarding the proposed contract works,
The Court finds no merit in the petition. including a brief description of the type, size, major
items, and other important or relevant features of the
works; and
Public bidding, as a method of government procurement, is governed by
the principles of transparency, competitiveness, simplicity, and
accountability.21 By its very nature and characteristic, a competitive public c) Consulting services, the name of the contract to be
bidding aims to protect the public interest by giving the public the best bid, a general description of the project and other
possible advantages thru open competition and in order to avoid or important or relevant information;
preclude suspicion of favoritism and anomalies in the execution of public
contracts.22 Except only in cases in which alternative methods of
3. The criteria to be used by the agency in the following: (i)
procurement are allowed, all government procurement shall be done by
eligibility check of prospective bidders; (ii) examination and
competitive bidding.23
evaluation of bids; and (iii) post qualification; which shall be on
a non-discretionary "pass/fail" basis;
In the case of Agan, Jr. v. Philippine International Air Terminals Co,
Inc.,24 the Court held:
4. The approved budget for the contract to be bid and the
source of funding;
Competition must be legitimate, fair and honest. In the field of government
contract law, competition requires, not only bidding upon a common
5. The period of availability of the bidding documents, the place
standard, a common basis, upon the same thing, the same subject matter,
where the bidding documents may be secured and, where
the same undertaking, but also that it be legitimate, fair and honest; and
applicable, the price of the bidding documents;
not designed to injure of defraud the government.

6. The date, time and place of the deadline for the submission
It has been held that the three principles in bidding are the offer to the
and receipt of the eligibility requirements, the pre-bid
public, opportunity for competition, and a basis for the exact comparison
conference if any, the submission and receipt of bids, and the
of bids. A regulation of the matter which excludes any of these factors
opening of bids; and
destroys the distinctive character of the system and thwarts the purpose
of its adoption.25
7. The contract duration or delivery schedule. [Emphasis
supplied]
As pointed out in the case of Power Sector Assets and Liabilities
Management Corporation v. Pozzolanic Philippines Incorporated,26 an
essential element of a publicly bidded contract is that all bidders must be Essentially, the procurement process involves the following steps: (1) pre-
on equal footing, not simply in terms of application of the procedural rules procurement conference; (2) advertisement of the invitation to bid; (3) pre-
and regulations imposed by the relevant government agency, but more bid conference; (4) eligibility check of prospective bidders; (5) submission
importantly, on the contract bidded upon. and receipt of bids; (6) modification and withdrawal of bids; (7) bid opening
and examination; (8) bid evaluation; (9) post qualification; (10) award of
the contract; and (11) notice to proceed. 27 Parenthetically, from the first
step of the procurement procedure, E. O. No. 40 and its implementing
rules are clear to the effect that the approved budget for the contract and Moreover, Section 25 of E.O. No. 40 and its IRR prohibit the BAC from
the source of the funding should be divulged to prospective bidders. imposing a minimum amount to be offered in the bid. It states:

Under the Rules Implementing E.O. No. 40, the BAC shall indicate in the Section 25. Ceiling for Bid Price. The approved budget for the contract
Invitation to Bid relevant information regarding the proposed project and shall be the upper limit or ceiling for the bid price. Bid prices which exceed
the standards that would be used in determining the pre-qualification and this ceiling shall be disqualified outright from further participating in the
post-qualification of the prospective bidders and in the evaluation of bids. bidding. There shall be no lower limit to the amount of the award. For this
It shall indicate, among others, a brief description of the project to be bid; purpose, the approved budget for the contract shall be that approved by
the approved budget for the contract to be bid; the criteria to be used by the head of the agency. [Underscoring supplied]
the agency concerned for the eligibility check; the availability of the bidding
documents; and the date, time and place of the deadline for the
Consequently, the provision in the "Instruction to Bidders" stating that no
submission of the eligibility requirements. In other words, the BAC shall
award of the contract shall be made to a bidder whose bid price is lower
furnish all information on the projects necessary for prospective bidders to
than the allowable government estimate (AGE) or AAE is not valid. The
properly prepare their bids in order to give them fair and equal opportunity
rule on the matter is clear. The PSC-BAC is obliged to observe and
to bid.
enforce the same in the procurement of goods and services for the project.
The law on public bidding is not an empty formality.29 A strict adherence to
Admittedly, PSC-BAC did not disclose in any of the bidding documents the the principles, rules and regulations on public bidding must be sustained
amount of the AAE.1âwphi1 The Bid Bulletin which was posted in if only to preserve the integrity and the faith of the general public on the
conspicuous places and the "Instruction to Bidders" that was distributed to procedure.30
qualified bidders did not indicate the amount of the AAE. Petitioners’
contention, that they were not bound to disclose the AAE and that Dear
WHEREFORE, the petition is DENIED. The April 17, 2008 Decision and
John Services never demanded its disclosure, is untenable. Under the
the June 11, 2008 Resolution of the Court of Appeals in CA-G.R. CV No.
law, the PSC-BAC is mandated to disclose not only the description of the
88606 are AFFIRMED.
items to be procured, and the eligibility requirements, among others, but
also the approved budget of the project. Competitive bidding is an
essential element of a public bidding. Thus, it should be conducted fairly SO ORDERED.
and openly with full and free opportunity for competition among bidders. It
has been held in a long line of cases that a contract granted without the -------------------------------------------------------------------------------------------------
competitive bidding required by law is void and the party to whom it is
awarded cannot benefit from it.28 Had Dear John Services and CBMI
known all the information regarding the bidding, a different set of bids
might have emerged.
 • G.R. No. 111091 August 21, 1995 The contract was to remain in effect from October 1, 1989 up to the end
of the construction period unless sooner terminated.4 Petitioner was to be
paid a monthly salary drawn from counter-part funds duly financed by
ENGINEER CLARO J. PRECLARO, petitioner, foreign-assisted projects and government funds duly released by the
vs. Department of Budget and Management.5
SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, respondents.
In November 1989, to build the aforementioned CMD Structure, DOST
KAPUNAN, J.:
contracted the services of the Jaime Sta. Maria Construction Company
with Engr. Alexander Resoso, as the company's project engineer. 6
On 14 June 1990, petitioner was charged before the Sandiganbayan with
a violation of Sec. 3(b) of R.A. No. 3019 as amended, otherwise known as
How petitioner committed a violation of the Anti-Graft & Corrupt Practices
the Anti-Graft and Corrupt Practices Act. The information against him read
Act is narrated in the Comment of the Solicitor General and amply
as follows:
supported by the records. The material portions are hereunder
reproduced:
That on or about June 8, 1990, or sometime prior thereto, in
Quezon City, Philippines, and within the jurisdiction of this
xxx xxx xxx
Honorable Court, the above-named accused, a public officer,
being then the Project Manager/ Consultant of the Chemical
Mineral Division, Industrial Technology Development Institute, 3. In the month of May, 1990, Alexander Resoso, Project
Department of Science and Technology, a component of the Engineer of the Sta. Maria Construction Company, was in the
Industrial Development Institute (ITDI for brevity) which is an process of evaluating a Change Order for some electricals in
agency of the Department of Science and Technology (DOST the building construction when petitioner approached him at the
for brevity), wherein the Jaime Sta. Maria Construction project site (p. 11, 25, Ibid.).
undertook the construction of the building in Bicutan, Taguig,
Metro Manila, with a total cost of SEVENTEEN MILLION SIX
4. Unexpectedly, petitioner made some overtures that expenses
HUNDRED NINETY FIVE THOUSAND PESOS
in the Change Order will be deductive (meaning, charged to the
(P17,695,000.00) jointly funded by the Philippine and Japanese
contractor by deducting from the contract price), instead of
Governments, and while the said construction has not yet been
additive (meaning, charged to the owner). Petitioner intimated
finally completed, accused either directly requested and/or
that he can forget about the deductive provided he gets
demanded for himself or for another, the sum of TWO
P200,000.00, a chunk of the contractor's profit which he roughly
HUNDRED THOUSAND PESOS (P200,000.00), claimed as
estimated to be around P460,000.00 (pp. 12-13, 22, Ibid.).
part of the expected profit of FOUR HUNDRED SIXTY
THOUSAND PESOS (P460,000.00) in connection with the
construction of that government building wherein the accused 5. Having conveyed the proposal to Jaime Sta. Maria, Sr., the
had to intervene under the law in his capacity as Project owner of Sta. Maria Construction Company, Resoso thereafter
Manager/Consultant of said construction — said offense having asked petitioner if he wanted a rendezvous for him to receive
been committed in relation to the performance of his official the money. Petitioner chose Wendy's Restaurant, corner E.
duties. Delos Santos Avenue and Camias Street, on June 6, 1990 at
around 8:00 o'clock in the evening (p. 14, Ibid.).
CONTRARY TO LAW.1
6. However, Sta. Maria, Sr. asked for two (2) more days or until
On 20 July 1990, during arraignment, petitioner pleaded "not guilty" to the the 8th of June, perceiving financial constraints (Ibid.).
charges against him.
7. Petitioner relented, saying "O.K. lang with me because we
On 30 June 1993, after trial on the merits, the Second Division of the are not in a hurry." (p. 15, Ibid.) Petitioner was thereafter asked
to bring along the result of the punch list (meaning, the list of
Sandiganbayan rendered judgment finding petitioner guilty beyond
defective or correctible works to be done by the contractor) (p.
reasonable doubt. The dispositive portion reads as follows:
15, Ibid.; p. 10, TSN, 18 Oct. 1991).

WHEREFORE, judgment is hereby rendered finding accused

8. On 7 June 1990, Sta. Maria, Sr. and Resoso proceeded to
Claro Preclaro y Jambalos GUILTY beyond reasonable doubt
the National Bureau of Investigation (NBI) to report the incident
of the violation of Section 3, paragraph (b) of Republic Act No.
(p. 15, 35, Ibid.).
3019, as amended, otherwise known as the Anti-Graft and
Corrupt Practices Act, and he is hereby sentenced to suffer an
indeterminate penalty ranging from SIX (6) YEARS and ONE 9. The NBI suggested an entrapment plan to which Sta. Maria,
(1) MONTH, as the minimum, to TEN (10) YEARS and ONE Sr. signified his conformity (p. 16, TSN, 12 Oct. 1990).
Accordingly, Sta. Maria, Sr. was requested to produce the
-------------------------------------------------------------------------------------- amount of P50,000.00 in P500.00 denomination to represent
the grease money (p. 37, TSN, 6 Sept. 1990).

(1) DAY, as the maximum, perpetual disqualification from public

10. The next day, or on 8 June 1990, Resoso delivered the
office and to pay the costs of this action.
money to the NBI. Thereafter, the money was dusted with
flourescent powder and placed inside an attache case (pp. 16-
SO ORDERED.2 17, Ibid.). Resoso got the attache case and was instructed not
to open it. Similarly, he was advised to proceed at the Wendy's
Restaurant earlier than the designated time where a group of
The antecedent facts are largely undisputed.
NBI men awaited him and his companion, Sta. Maria, Jr. (pp.
17-18, Ibid.).
On 1 October 1989, the Chemical Mineral Division of the Industrial
Technology Development Institute (ITDI), a component of the Department
11. Hence, from the NBI, Resoso passed by the Jade Valley
of Science and Technology (DOST) employed Petitioner under a written
Restaurant in Timog, Quezon City, to fetch Sta. Maria, Jr. (Ibid.).
contract of services as Project Manager to supervise the construction of
the ITDI-CMD (JICA) Building at the DOST Compound in Bicutan, Taguig,
Metro Manila.3 12. At around 7:35 p.m., Resoso and Sta. Maria, Jr. arrived at
the Wendy's Restaurant. They were led by the NBI men to a
 table previously reserved by them which was similarly adjacent q. When Engr. Sta. Maria intervened and interviewed him
to a table occupied by them (pp. 18-19, Ibid.). that way, was there
anything that
happened?
13. Twenty minutes later, petitioner arrived. Supposedly, the
following conversation took place, to wit:
a. Jimmy Sta. Maria, Jr. handed two envelopes to
Preclaro.
JUSTICE BALAJADIA:

q. Did Claro Preclaro receive these two envelopes from

q. When Dave Preclaro arrived, what did he do?
Engineer Sta. Maria?

a. We asked him his order and we talked about the punch

a. Yes, sir. (pp. 19-21, Ibid., See also pp. 13-14, TSN, 29
list.
Oct. 1990.)

q. What was his comment about the punch list?

14. From the moment petitioner received the two envelopes with
his right hand, thereafter placing them under his left armpit, he
a. He told us that it is harder to produce small items than was accosted by the NBI men (p. 22, TSN, 12 Oct. 1990).
big ones.
15. A camera flashed to record the event. Petitioner instinctively
q. How long did you converse with Engr. Claro Preclaro? docked to avoid the taking of pictures. In such manner, the two
envelopes fell (p. 23, Ibid.).
a. I think thirty minutes or so.
16. The NBI men directed petitioner to pick up the two
envelopes. Petitioner refused. Hence, one of the NBI men
q. Was Preclaro alone when he came?
picked up the envelopes and placed them inside a big brown
envelope (p. 27, Ibid.)
a. Yes, Your Honor.
17. Petitioner was thenceforth brought to the NBI for
xxx xxx xxx examination (p. 28; Ibid.).

PROS. CAOILI: 18. At the NBI Forensic Chemistry Section, petitioner's right
palmar hand was tested positive of flourescent powder. The
same flourescent powder, however, cannot be detected in
q. When you talk[ed] about his punch list, did you talk petitioner's T-shirt and pants (p. 5, TSN, 29 Oct. 1990).7
about anything else?

xxx xxx xxx

a. Engineer Sta. Maria, Jr., they were conversing with
Dave Preclaro and he
told [him], "O, paano Thus, as brought out at the outset, an information was filed against
na." petitioner which, after due hearing, resulted in his conviction by the
Sandiganbayan. Not satisfied with the decision, petitioner instituted the
present petition for review, ascribing to the Sandiganbayan the following
JUSTICE ESCAREAL: errors:

q. Who said "Paano na?" 1. THE SANDIGANBAYAN ERRED IN TAKING COGNIZANCE

OF THE CASE, INSTEAD OF DISMISSING IT FOR LACK OF
a. Engineer Sta. Maria, [Jr.]. And then Preclaro told [him], JURISDICTION, THE [PETITIONER] NOT BEING A PUBLIC
"Paano, How will the OFFICER; and
money be arranged
and can I bring it?" he 2. THE SANDIGANBAYAN ERRED IN NOT RULING THAT
said. NOT ALL THE ELEMENTS OF THE OFFENSE CHARGED
HAVE BEEN ESTABLISHED BEYOND REASONABLE
And then Jimmy Sta. Maria, Jr. told him it was arranged DOUBT AND/OR THAT THE GUILT OF THE [PETITIONER]
on two bundles on two HAS NOT BEEN ESTABLISHED BEYOND REASONABLE
envelopes. DOUBT.

And then Dave Preclaro told, "Puede" and he asked We find the petition unmeritorious.
Jimmy Sta. Maria, Jr.
if there is express On the first issue, petitioner asserts that he is not a public officer as defined
teller and could he by Sec. 2(b) of the Anti-Graft & Corrupt Practices Act (R.A. No. 3019 as
deposit during night amended), because he was neither elected nor appointed to a public
time but Engineer Sta. office. Rather, petitioner maintains that he is merely a private individual
Maria, Jr. told him, "I hired by the ITDI on contractual basis for a particular project and for a
do not have any specified period8 as evidenced by the contract of services9 he entered into
knowledge or I do not with the ITDI. Petitioner, to further support his "theory," alleged that he was
have any express not issued any appointment paper separate from the abovementioned
teller you can deposit. contract. He was not required to use the bundy clock to record his hours
I only know credit of work and neither did he take an oath of office. 10
card."

We are not convinced by petitioner's arguments.

PROS. CAOILI:
Petitioner miscontrues the definition of "public officer" in R.A. No. 3019 Anent the second issue, we likewise find Petitioner's allegations
which, according to Sec. 2(b) thereof "includes elective and appointive completely bereft of merit.
officials and employees, permanent or temporary, whether in the classified
or unclassified or exemption service receiving compensation, even
Petitioner insists that the prosecution has failed to establish his guilt
nominal, from the government. . . ."
beyond reasonable doubt and that the charges against him should be
rejected for being improbable, unbelievable and contrary to human nature.
The word "includes" used in defining a public officer in Sec. 2(b) indicates
that the definition is not restrictive. The terms "classified, unclassified or
We disagree.
exemption service" were the old categories of positions in the civil service
which have been reclassified into Career Service and Non-Career
Service 11 by PD 807 providing for the organization of the Civil Service Proof beyond reasonable doubt does not mean that which produces
Commission 12 and by the Administrative Code of 1987. 13 absolute certainty. Only moral certainty is required or "that degree of proof
which produces conviction in an unprejudiced mind." 20 We have
extensively reviewed the records of this case and we find no reason to
Non-career service in particular is characterized by —
overturn the findings of the Sandiganbayan.

(1) entrance on bases other than those of the usual test of merit
Petitioner enumerates the alleged improbabilities and inconsistencies in
and fitness utilized for the career service;and (2) tenure which
the testimonies of the prosecution witnesses. We shall examine the
is limited to a period specified by law, or which is coterminous
testimonies referred to with meticulousness.
with that of the appointing authority or subject to his pleasure,
or which is limited to the duration of a particular project for which
purpose employment was made. Petitioner asserts that it was improbable for him to have demanded
P200,000.00 from Engr. Resoso, when he could have just talked directly
to the contractor himself. It is quite irrelevant from whom petitioner
The Non-Career Service shall include:
demanded his percentage share of P200,000.00 whether from the
contractor's project engineer, Engr. Alexander Resoso or directly from the
(1) Elective officials and their personal or confidential staff; contractor himself Engr. Jaime Sta. Maria Sr. That petitioner made such a
demand is all that is required by Sec. 3(b) of R.A. No. 3019 and this
element has been sufficiently established by the testimony of Engr.
(2) Secretaries and other officials of Cabinet rank who hold their
Resoso, thus:
positions at the pleasure of the President and their personal or
confidential staff(s);
xxx xxx xxx
(3) Chairman and members of commissions and boards with
fixed terms of office and their personal or confidential staff; Q You said when you were computing your Change Order
Mr. Preclaro or Dave Preclaro whom you identified
approached you, what did you talk about?
(4) Contractual personnel or those whose employment in the
government is in accordance with a special contract to
undertake a specific work or job, requiring special or technical A He mentioned to me that we are deductive in our
skills not available in the employing agency, to be accomplished Change Order three and four so after our conversation I
within a specific period, which in no case shall exceed one year, told this conversation to my boss that we are deductible in
and performs or accomplishes the specific work or job, under the Change Order three and four and then my boss told
his own responsibility with a minimum of direction and me to ask why it is deductive.
supervision from the hiring agency; and
Q Did you ask the accused here, Dave Preclaro why it is
14
(5) Emergency and seasonal personnel. (Emphasis ours.) considered deductive?

From the foregoing classification, it is quite evident that petitioner falls A Yes, sir.
under the non-career service category (formerly termed the unclassified
or exemption service) of the Civil Service and thus is a public officer as
Q What was his answer if any?
defined by Sec. 2(b) of the Anti-Graft & Corrupt Practices Act (R.A. No.
3019).
A I asked him that my boss is asking me to ask you how
come it became deductive when my computation is
The fact that petitioner is not required to record his working hours by
additive and he told me that I have done so much for your
means of a bundy clock or did not take an oath of office became
company already and then he picked up cement bag
unessential considerations in view of the above-mentioned provision of
paper bag and computed our alleged profit amounting to
law clearly including petitioner within the definition of a public officer.
One Hundred Sixty Thousand Pesos and then he told me
that he used to use some percentage in projects
Similarly, petitioner's averment that he could not be prosecuted under the maximum and minimum and in our case he would use a
Anti-Graft & Corrupt Practices Act because his intervention "was not minimum percentage and multiply to 60 and . . .
required by law but in the performance of a contract of services entered
into by him as a private individual contractor," 15 is erroneous. As
JUSTICE ESCAREAL:
discussed above, petitioner falls within the definition of a public officer and
as such, his duties delineated in Annex "B" of the contract of
services 16 are subsumed under the phrase "wherein the public officer in Q What is 460?
his official capacity has to intervene under the law." 17 Petitioner's
allegation, to borrow a cliche, is nothing but a mere splitting of hairs.
A P460,000.00 and he said take of the butal and get two
Hundred Thousand Pesos.
Among petitioner's duties as project manager is to evaluate the
contractor's accomplishment reports/billings 18hence, as correctly ruled by
the Sandiganbayan he has the "privilege and authority to make a favorable JUSTICE BALAJADIA:
recommendation and act favorably in behalf of the government," signing
acceptance papers and approving deductives and additives are some What is the translation now?
examples. 19 All of the elements of Sec. 3(b) of the Anti-Graft & Corrupt
Practices Act are, therefore, present.
WITNESS: Q Did you relay the postponement to Dave Preclaro?

A And he said disregard the excess and I will just get the A Yes sir. I told what my boss told me.
P200,000.00. (Emphasis ours.)
Q What was his reaction?
PROS. CAOILI:
A Dave told me "O.K. lang with me" because we are not
Q What does he mean by that if you know? in a hurry. Any way we are the ones to sign the
acceptance papers and my boss instructed me that on
Friday to ask Dave to bring along the result of the punch
A I do not know sir.
list and if possible also to bring along the acceptance
papers to be signed by Dave, Lydia Mejia and Dr. Lirag
He just said, I will get the P200,000.00 and tell it to your the director.
boss. (Emphasis ours.)
Q What happened next after meeting with Preclaro to
JUSTICE BALAJADIA: relay the postponement if any?

Q What is P200,000.00? A Nothing happened. The next day, Thursday the boss
instructed me to go with him to the NBI to give a
statement.
A It is Two Hundred Thousand Pesos.

Q Did you go to the NBI and report to the incident to the

PROS. CAOILI: NBI?

Q What did you answer him when he told you that? A Yes sir.

A He told me to forget the deductive and electrical and

Q Did you give a statement before any of the agents of
after that I told my boss what he told me.
the of the NBI?

Q Who is your boss?

A Yes sir. 21

A Santa Maria Sr. xxx xxx xxx

Q What was the reaction of your boss when you relayed Likewise, petitioner's alleged refusal to see Mr. Jaime Sta. Maria Sr. when
the message to Mr. Preclaro? the latter tried to arrange meetings with him regarding his demand 22 does
not weaken the cause against petitioner. It does not at all prove that
A The next day he told me to ask Dave where and when petitioner did not ask for money. Conceivably petitioner did not muster
to pick up the money so the next day I asked Dave "Where enough courage to ask money directly from the contractor himself. Getting
do you intend to get the money, the Boss wanted to the amount through the project engineer would be safer because if Mr.
know." Sta. Maria, Sr. had refused to give money, petitioner could always deny
having made the demand.
Q What was the answer of Dave?
Petitioner contends that the percentage demanded in the amount of
P200,000.00 is too high considering that the estimated profit of the
A And he told me, Wendy's Restaurant at 3:00 o'clock. contractor from the CMD project is only P460,000.00. In petitioner's words,
this would "scare the goose that lays the golden egg." 23 We reject this
Q When? argument. The aforementioned contractor's profit is petitioner's own
computation as testified to by Engr. Resoso:
A June 6 Wednesday.
xxx xxx xxx
Q When he told you that did you comply with June 6
appointment? A I asked him that my boss is asking me to ask you how
come it became deductive when my computation is
additive and he told me that I have done so much for your
A I told my boss what he told me again that the meeting company already and then he picked up cement bag
will take place at Wendy's Restaurant corner Edsa and paper bag and computed our alleged profit amounting to
Camias Street at around 8:00 o'clock p.m. June 6, One Hundred Sixty Thousand Pesos and then he told me
Wednesday. that he used to use some percentage in projects
maximum and minimum and in our case he would use a
Q What did your boss tell you? minimum percentage and multiply to 460 and . .
. (Emphasis ours.)
A The next day he told me to ask Dave.
JUSTICE ESCAREAL:
Q What did your boss tell you?
Q What is 460?
A My boss told me to ask Dave to postpone the meeting
on June 6 to be postponed on June 8 at the same place A P460,000.00 and it ended to P215 thousand or
and same time because my boss is having financial P20,000.00 and he said take of the butal and get the Two
problem. Hundred Thousand Pesos. (Emphasis ours.)
 JUSTICE BALAJADIA: Q Do you have any counterpart to supervise the project
from the government side?
What is the translation now?
A Yes, we have.
WITNESS:
Yes, the DOST have a technical Committee Infra-
Structure Committee and also the ITDI as its own
A And he said disregard the excess and I will just get the
representative.
P200,000.00.

Q Who composed the Technical Committee of the DOST?

PROS. CAOILI:

A A certain Engineer Velasco, Engineer Sande Banez and

Q What does he mean by that if you know?
Engineer Mejia.

A I do not know sir.

Q How about the ITDI?

He just said, I will get the P200,000.00 and tell it to your

A The ITDI representative composed of Dave Preclaro.
boss. 24

Q Who is this Dave Preclaro?

xxx xxx xxx

A He is the consultant of ITDI. (Emphasis ours.)

The records, however, do not show the true and actual amount that the
Sta. Maria Construction will earn as profit. There is, therefore, no basis for
petitioner's contention as the actual profit may be lower or higher than his xxx xxx xxx
estimation.
ATTY. CAOILI:
Besides, as related by Engr. Resoso, petitioner considers the
P200,000.00 percentage proper compensation since he has allegedly
Q As Project Engineer do you consult to any body
done so much for the Sta. Maria construction company. 25
regarding your job?

Petitioner also argues that:

A First if there is any problem in the site I consult my boss.

According to STA. MARIA, SR., they were deductive by

PROS. CAOILI:
P280,000.00 (Id., pp. 34-35).

Q How about with the other consultants representing the

If STA. MARIA CONSTRUCTION was deductive in the amount
ITDI and DOST?
of P280,000.00, why would the petitioner still demand
P200,000.00 which would increase the contractor's loss to
P480,000.00! A In the construction site we have meeting every Monday
to discuss any problem.
It might have been different if the changes were additive where
STA. MARIA CONSTRUCTION would have earned more, Q With whom do you discuss this problem?
thereby providing motive for the petitioner to ask for a
percentage! 26
A The Infra-structure Committee of DOST and the Infra-
structure Committee of ITDI, the architect and the
But this is precisely what petitioner was bargaining for — P200,000.00 in contractor. We had weekly meetings.
exchange for forgetting about the deductive 27 and thus prevent the Sta.
Maria Construction from incurring losses.
Q What matters if any do you consult with Mr. Claro
Preclaro?
Petitioner's contention that it was impossible for him to make any demands
because the final decision regarding accomplishments and billing lies with
ATTY. JIMENEZ:
the DOST technical committee is unacceptable. Petitioner is part of the
abovementioned technical committee as the ITDI representative
consultant. This is part of his duties under the contract of services in No basis.
connection with which he was employed by the ITDI. Even,
assuming arguendo that petitioner does not make the final decision, as
supervisor/consultant, his recommendations will necessarily carry much JUSTICE ESCAREAL:
weight. Engr. Resoso testified thus:
They met on problems on Mondays.
PROS. CAOILI:
ATTY. JIMENEZ:
Q As a Project Engineer to whom do you present your
billing papers accomplishment report or purchase order? But there is no mention of Preclaro specifically.

A The billing paper was being taken cared of by the, of our JUSTICE ESCAREAL:
office. I personally do my job as supervision in the
construction.
With the representative of DOST and Preclaro

ATTY. JIMENEZ:
 Does that also mean that Preclaro is also among the Maria Jr. and the NBI agents whose testimonies on the circumstances
representatives he is going to consult with? before, during and after the turn-over are consistent, logical and credible.

Well any way. . . According to NBI Agent Francisco Balanban Sr., they purposely took no
photographs of the actual turn-over so as not to alert and scare off the
petitioner. During cross-examination Agent Balanban Jr. stated:
JUSTICE ESCAREAL:

xxx xxx xxx

Witness may answer the question.

Q Now, of course, this entrapment operation, you made

Read back the question.
certain preparation to make sure that you would be able
to gather evidence in support of the entrapment?
COURT STENOGRAPHER:
A Yes sir.
Reading back the question as ordered by the Court.
Q As a matter of fact you even brought photographer for
WITNESS: the purpose?

A Every Monday meeting we tackle with accomplishment A That is right sir.

report the billing papers. 28 (Emphasis ours.)
Q And that photographer was precisely brought along to
xxx xxx xxx record the entrapment?

Petitioner also claims that the testimonies of the prosecution witnesses A Yes sir.
regarding the entrapment itself are conflicting, doubtful or improbable:
Q From the beginning to the end, that was the purpose?
(aaa) according to RESOSO, only FOUR (4) P500 bills were
dusted with flourescent powder and used in the alleged
A At the time of the arrest sir.
entrapment.

ATTY. JIMENEZ:
Contradicting RESOSO, STA. MARIA, SR. said that he gave
fifty thousand (P50,000.00) pesos in P500 denomination to the
NBI. 29 From the time of the handing over of the envelopes until
the entrapment would have been terminated?
There is no such inconsistency. Said witnesses were testifying on two
different subjects. Engr. Sta. Maria, Sr.'s testimony touched on the amount A No sir we plan to take the photograph only during the
he gave the NBI for use in the entrapment while Engr. Resoso's arrest because if we take photographs he would be
declaration referred only to the number of bills dusted with flourescent alerted during the handing of the envelopes. (Emphasis
powder. ours.)

Petitioner, likewise, misappreciated the following testimony of Resoso: Q So you did not intend to take photographs of the act of
handing of the envelopes to the suspect?
PROS. CAOILI:
A We intended but during that time we cannot take
photographs at the time of the handling because the flash
Q What did he do with the two envelopes upon receiving
will alert the suspect. (Emphasis ours.)
the same?

JUSTICE ESCAREAL:
A Then he asked Jaime Sta. Maria, Jr. if there is bank
teller express, if he could deposit the money but Mr. Sta.
Maria said, "I do not have, I only have credit cards." 30 Why did you not position the photographer to a far
distance place with camera with telescopic lens?
Petitioner intended to deposit the money in his own account not that of Mr.
Sta. Maria, Jr. He was merely inquiring from the latter if there was an A We did not Your Honor.
express teller nearby where he could make the deposit. Mr. Sta. Maria Jr.
himself testified as follows:
ATTY. JIMENEZ:

A He asked me if there was express teller. I told him I do

So was it your intention to take photographs only at the
not know then he asked me whether it is possible to
time that he is already being arrested?
deposit at the Express Teller at that time. I told him I don't
know because I have no express teller card and he asked
me how am I going to arrange, how was it arranged if I will A Yes sir. 32
bring it, can I bring it. Then I told him that it was placed in
two envelopes consisting of 500 Peso bills and then he
xxx xxx xxx
said "Okay na yan." 31

The failure of the NBI to take photographs of the actual turn-over of the Petitioner insists that when his hands were placed under ultra-violet light,
money to petitioner is not fatal to the People's cause. The transaction was both were found negative for flourescent powder. This is petitioner's own
conclusion which is not supported by evidence. Such self-serving
witnessed by several people, among whom were Engr. Resoso, Mr. Sta.
statement will not prevail over the clear and competent testimony and the
report 33 submitted by the forensic expert of the NBI Ms. Demelen R. dela
Cruz, who was the one who conducted the test and found petitioner's right A Right hand sir.
palmar hand positive for flourescent powder, the same hand he used,
according to witnesses Resoso and Sta. Maria Jr., to get the money from
Q What other examination did you conduct?
the latter.

A And also the clothing, consisting of the t-shirts and the

xxx xxx xxx
pants were examined. Under the ultra violet lamp the
presence of the flourescent powder of the t-shirts and
Q Mrs. dela Cruz since when have you been a Forensic pants cannot be seen or distinguished because the fibers
Chemist at NBI? or the material of the cloth under the ultra violet lamp was
flouresce.
A Since 1981 sir.
Q Please tell the Court why the t-shirts and pants under
the ultra violent lamp was flouresce?
Q JUSTICE ESCAREAL:

A The materials or the fibers of the clothings it could have

Q By the way, is the defense willing to admit that the
been dyed with flourescent dyes sir. 34
witness is a competent as . . . .

xxx xxx xxx

ATTY. JIMENEZ:

What we find improbable and contrary to human experience is petitioner's

Admitted Your Honor.
claim that he was set up by Engr. Sta. Maria Sr. and Engr. Resoso for no
other purpose but revenge on account, for petitioner's failure to
PROS. CAOILI: recommend the Sta. Maria Construction to perform the extra electrical
works. 35
Madam Witness did you conduct a forensic examination
in the person of one Dave Preclaro y Jambalos? The Sandiganbayan has aptly ruled on this matter, thus:

A Yes sir. For another, the claim of accused that there was ill-will on the
part of the construction company is hardly plausible. It is highly
improbable for the company to embark on a malicious
Q If that person whom you examined is here in court
prosecution of an innocent person for the simple reason that
would you be able to recognize him? such person had recommended the services of another
construction firm. And it is extremely impossible for such
ATTY. JIMENEZ: company to enlist the cooperation and employ the services of
the government's chief investigative agency for such an
anomalous undertaking. It is more in accord with reason and
We admit that the accused is the one examined by the logic to presuppose that there was some sort of a mischievous
witness. demand made by the accused in exchange for certain favorable
considerations, such as, favorable recommendation on the
ATTY. CAOILI: completeness of the project, hassle-free release of funds,
erasure of deductives, etc. Indeed, the rationale for the
occurrence of the meeting and the demand for money is infinite
Did you prepare the result of the examination in writing? and boundless. 36

A Yes sir. As correctly pointed out by the Solicitor General, Engr. Sta. Maria Sr., who
was then engaged in the construction of another DOST building, would
PROS. CAOILI: not risk his business or livelihood just to exact revenge which is neither
profitable nor logical. As we aptly stated in Maleg v. Sandiganbayan: 37
Showing to you Physic Examination No. 90-961 which for
purposes of identification has already been marked as It is hard to believe that the complainant who is a contractor
Exh. H what relation has this have with the report that you would jeopardize and prejudice his business interests and risk
mentioned a while ago? being blacklisted in government infrastructure projects, knowing
that with the institution of the case, he may find it no longer
advisable nor profitable to continue in his construction ventures.
A This is the same report that I prepared sir. It is hardly probable that the complainant would weave out of
the blue a serious accusation just to retaliate and take revenge
Q How did you conduct such flourescent examination? on the accused.

A The left and right hands of the accused were placed From the foregoing, the conclusion is inescapable that on the basis of the
under the ultra violet lamp sir. testimonial and documentary evidence presented during the trial, the guilt
of petitioner has been established beyond reasonable doubt.
Q What was the result?
WHEREFORE, the appealed decision of the Sandiganbayan is hereby
AFFIRMED.
A It gave a . . . under the ultra violent lamp the palmer
hands of the suspect gave positive result for the presence
of flourescent powder. SO ORDERED.

Q What palmar hands?

ADMINISTRATIVE LAW- Administrative law is the body of law and legal (7) Department refers to an executive department created by
work that deals with government agencies. Lawmakers create law. For purposes of Book IV, this shall include any
government agencies to carry out laws and administer the functions of instrumentality, as herein defined, having or assigned the rank
government. These agencies create, implement and enforce regulations. of a department, regardless of its name or designation.
All of the work that goes into these activities falls under the category of
administrative law.
(8) Bureau refers to any principal subdivision or unit of any
department. For purposes of Book IV, this shall include any
principal subdivision or unit of any instrumentality given or
EXECUTIVE ORDER NO. 292 assigned the rank of a bureau, regardless of actual name or
designation, as in the case of department-wide regional offices.
INSTITUTING THE "ADMINISTRATIVE CODE OF 1987"
(9) Office refers, within the framework of governmental
organization, to any major functional unit of a department or
WHEREAS, the Administrative Code currently in force was first forged in
bureau including regional offices. It may also refer to any
1917 when the relationship between the people and the government was
position held or occupied by individual persons, whose
defined by the colonial order then prevailing;
functions are defined by law or regulation.

WHEREAS, efforts to achieve an integrative and over-all recodification of

(10) Instrumentality refers to any agency of the National
its provisions resulted in the Administrative Code of 1978 which, however,
Government, not integrated within the department framework
was never published and later expressly repealed;
vested within special functions or jurisdiction by law, endowed
with some if not all corporate powers, administering special
WHEREAS, the effectiveness of the Government will be enhanced by a funds, and enjoying operational autonomy, usually through a
new Administrative Code which incorporates in a unified document the charter. This term includes regulatory agencies, chartered
major structural, functional and procedural principles and rules of institutions and government-owned or controlled corporations.
governance; and
(11) Regulatory agency refers to any agency expressly vested
WHEREAS, a new Administrative Code will be of optimum benefit to the with jurisdiction to regulate, administer or adjudicate matters
people and Government officers and employees as it embodies changes affecting substantial rights and interests of private persons, the
in administrative structures and procedures designed to serve the people; principal powers of which are exercised by a collective body,
such as a commission, board or council.
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the
Philippines, by virtue of the powers vested in me by the Constitution, do (12) Chartered institution refers to any agency organized or
hereby promulgate the Administrative Code of 1987, as follows: 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
INTRODUCTORY PROVISIONS monetary authority of the State.

Section 1. Title. - This Act shall be known as the "Administrative Code of (13) Government-owned or controlled corporation refers to any
1987." agency organized as a stock or non-stock corporation, vested
with functions relating to public needs whether governmental or
Section 2. General Terms Defined. - Unless the specific words of the text, proprietary in nature, and owned by the Government directly or
or the context as a whole, or a particular statute, shall require a different through its instrumentalities either wholly, or, where applicable
meaning: as in the case of stock corporations, to the extent of at least fifty-
one (51) per cent of its capital stock: Provided, That
government-owned or controlled corporations may be further
(1) Government of the Republic of the Philippines refers to the categorized by the Department of the Budget, the Civil Service
corporate governmental entity through which the functions of Commission, and the Commission on Audit for purposes of the
government are exercised throughout the Philippines, including, exercise and discharge of their respective powers, functions
save as the contrary appears from the context, the various arms and responsibilities with respect to such corporations.
through which political authority is made effective in the
Philippines, whether pertaining to the autonomous regions, the
provincial, city, municipal or barangay subdivisions or other (14) "Officer" as distinguished from "clerk" or "employee", refers
forms of local government. to a person whose duties, not being of a clerical or manual
nature, involves the exercise of discretion in the performance of
the functions of the government. When used with reference to a
(2) National Government refers to the entire machinery of the person having authority to do a particular act or perform a
central government, as distinguished from the different forms of particular function in the exercise of governmental power,
local governments. "officer" includes any government employee, agent or body
having authority to do the act or exercise that function.
(3) Local Government refers to the political subdivisions
established by or in accordance with the Constitution. (15) "Employee", when used with reference to a person in the
public service, includes any person in the service of the
(4) Agency of the Government refers to any of the various units government or any of its agencies, divisions, subdivisions or
of the Government, including a department, bureau, office, instrumentalities.
instrumentality, or government-owned or controlled
corporations, or a local government or a distinct unit therein.

(5) National Agency refers to a unit of the National Government.

(6) Local Agency refers to a local government or a distinct unit

therein.